Current public sentiment towards the housing market?

[Calina]

It not in our interest for property prices to keep rising, and certainly not in our interest for there to be a crash. All in all a few interest rate rises are good news provided they stop say early/mid next year.

1) it is not in our interest for property prices to keep rising
2) it is not in our interest for there to be a crash

Unfortunately
3) it is not in our interest for property prices to remain at the levels they are at the moment given the disparity between salaries and average prices. For some (any) sort of rationality to come into the market, either salaries will have to rise quite a bit or houseprices will have to come down. Current social partnership talks about something like 10% in 27 months and most private sector employees are claiming they won't even see that. So...hmm...

So what's it to be? Thing is, if property prices are going to remain at current levels, something like 40% of the buyers are going to dry up so...

I think that means many houses, fewer buyers, supply, demand, prices heading down?

I'd venture to say that what's not in our interest is a long drawn out correction. A sharp shock and life as normal...but I can't see it happening. Not with so many people trying to convince themselves that everything is alright.

 

[walk2dewater]

If it goes to that, we are all screwed. .

I'm not. And anyone with a pile of cash ain't either. Bring on higher rates I say. Higher the better cos with inflation at 5% and rabobank only paying 3.6% before DIRT I'm getting poorer.

but its very unlikely thanks to the ECB being too big for currency speculators to really take on. NZ doesnt have that luxury...
.

Sez who? Sez the bank, sez the estate agent? Just because every vested interest in Ireland says it over and over and over ad nauseum don't make it true. Why lo and behold, HOKs "Research" in todays IT says that another 1% increase is the worst case (top right on page5). No, that aint the worse case at all.

 

[phoenix_n]

no, your way to early on this.

markets don't plummet, they yo-yo up or down to a new plateau..the less liquid, the longer it takes.

not a swallow does a summer make...time left for fools still to be aprted from their money...

the mentallity still exists that property doesn't drop, not in Ireland.

And they thought WW1 would be over my xmas.

 

[Gwynston]

Currently living in the U.K and planning to move back to Ireland to start a family. Houses prices are a huge concern as when I look at what I'll have to pay out in repayments its mind boggling. What about when the kids come along?
...
So I think there is a real need for concern about the future, we need to be looking at the -long term-BIG picture.

Why not rent? Sounds like the perfect choice while you wait to see what happens with the property market.

 

[MadPad]

So you tried to bate us with the 1999 article and it didn't work... and you think it's funny that people have a clear indication of where interest rates are heading. Do you think you are more clever than the majority of people posting here? Do you think we're stupid enough to fall for such a lame trick? Such a pathetic attempt to make a point degrades anything else you have to say.

Well, there was nothing wrong with an attempt to bait people, although that wasn’t the purpose of the post. Among all the doom and gloom on the thread, sometimes its good to be reminded how today’s certainties look silly tomorrow.

Far from considering myself smarter that people on the forum, excluding your good self of course, events since 1999 proved me particularly poor in predicting the future. I went with the argument that prices had peaked in 99 and didn’t invest in a BTL. So I’m not that smart.

Apart from my PPR, which is paid for, I don’t have any skin in the game on Irish property so I am not trying to drive a particular agenda.

I think that among all the posts both bear and bull, its worth looking back on what the “smart people” were saying a few years ago and maybe learning something from them. Im not saying that just because some smart guys predicted a crash in ’99 and some smart guys are doing the same now that it WONT happen, all I’m saying is they are just predictions.

 

[MadPad]

I'm not. And anyone with a pile of cash ain't either. Bring on higher rates I say. Higher the better cos with inflation at 5% and rabobank only paying 3.6% before DIRT I'm getting poorer.



Sez who? Sez the bank, sez the estate agent? Just because every vested interest in Ireland says it over and over and over ad nauseum don't make it true. Why lo and behold, HOKs "Research" in todays IT says that another 1% increase is the worst case (top right on page5). No, that aint the worse case at all.

Yeah, but if higher rates hurt nearly everyone except yourself, then it aint much use, unless its a big wad of cash A big wad of cash is always good.

Yeah, youre right, no guarantee ECB wont raise rates to 10% but they dont want to. Small countries are often forced to in order to fend off currency speculators. Thankfully we are part of the EU and aside from the US $, we are one of the biggest and the EU has enough reserves to cause most speculators to think twice. The speculators will try to pick off weaker currencies, remember when Ireland was forced to devalue, we simply didnt have the reserves to fight the speculators.

 

[whathome]

Im not saying that just because some smart guys predicted a crash in ’99 and some smart guys are doing the same now that it WONT happen, all I’m saying is they are just predictions.

Predicting when a crash will happen is very different to having insight on interest rate movements based on ECB comment. The ECB provide a lot of pointers to indicate future rate movements, reading these pointers is not the same as making predictions on a crash.

 

[MadPad]

1) it is not in our interest for property prices to keep rising
2) it is not in our interest for there to be a crash

Unfortunately
3) it is not in our interest for property prices to remain at the levels they are at the moment given the disparity between salaries and average prices. For some (any) sort of rationality to come into the market, either salaries will have to rise quite a bit or houseprices will have to come down. Current social partnership talks about something like 10% in 27 months and most private sector employees are claiming they won't even see that. So...hmm...

So what's it to be? Thing is, if property prices are going to remain at current levels, something like 40% of the buyers are going to dry up so...

I think that means many houses, fewer buyers, supply, demand, prices heading down?

I'd venture to say that what's not in our interest is a long drawn out correction. A sharp shock and life as normal...but I can't see it happening. Not with so many people trying to convince themselves that everything is alright.

Forget whats in your interest, whats the best result for the country?
Maybe a long drawn out correction allowing for inflation to bring property back would be better for Ireland as its part of the EU? Maybe its best to get it over with?

Or maybe we should hope the euro gets devalued....

Its a conundrum isn't it...

 

[tententwenty]

Well, there was nothing wrong with an attempt to bait people,

Yeah there is, its called trolling.

Far from considering myself smarter that people on the forum, excluding your good self of course, events since 1999 proved me particularly poor in predicting the future.

Actually you would have been right in 1999, or close anyway. If interest rates hadn't been floored in 2001, the price rises would have deflated and things would have returned more or less to equilibrium. The thing is now that even if interest rates collapse again, for some unknown reason, the house value to salary rates is too far off the scale to support further increases. And interest rates aren't going to drop again, short of another 9-11 scale attack. And even then I would have my doubts.

 

[tententwenty]

Maybe a long drawn out correction allowing for inflation to bring property back would be better for Ireland as its part of the EU?

Being one of the richest countries in the world, apparently, and still not being a net EU contributor will not have endeared us to Brussels any. They won't be doing us any favours to pull our fat out of the fire this time around, EU member or not.

 

[Marie]

€380 for a 500sq ft studio flat in Frankfurt.

€750 for a (what looks smaller) studio in Dublin.

http://www.daft.ie/searchrental.daft?search=rental&id=420054

I like that studio in Dublin, you fall out of bed and are in the kitchen, perfect if you have an attack of the midnight munchies.

'Spacious'? Shower and w.c. appear to occupy a single bed width!!!

 

[Doris]

I was wondering if anyone had any insight into the link between the Irish rental markets and a slowdown crash in the cities property prices?

 

[whathome]

I went with the argument that prices had peaked in 99 and didn’t invest in a BTL. So I’m not that smart.

Maybe you're not that smart or maybe you were just naive to believe the argument that prices had peaked in 1999. If you had looked at fundamentals rather than trying to time the market it might have worked out better for you. Gross yields above 7% were available in 1999, it wasn't necessary to subsidise tenants. Decent yields will return and when that happens, Irish property will be a viable investment again. Who knows when property will drop to a level that makes sense for a professional investor - could be next year or a few years from now.

 

[Sidewinder]

A neutral ECB rates is generally agreed to be 4%, so mortgages (ECB + say 1%) should be somewhere between 3% and say 6%. So if property in Ireland is valued correctly, an increase of 1% should be a pain for people but shouldnt be a cause for sleepless nights for 99% of mortgage holders... The fact that a .25% increase is billed as a hike says enough

No, the "neutral" rate is a real rate of interest of 2-3%. Given the ECB inflation target of 2%, if that is met then the long-term neutral ECB rate is indeed 4-5%. But global inflation has been held down for the last decade due to deflationary effects from Germany, Japan and China. If inflation across the Eurozone goes to 3-4% (which is still low, does nobody actually remember the 70s, 80s and early 90s anymore???) then the ECB will adopt a tight stance so we can easily foresee a scenario like this:

persistent inflation at 3.5%
neutral rate therefore 6%
Tight stance required to fight inflation, ECB rate of up to 8%

Is it just me, or do bull arguments seem very flimsy and not really based on any actual economic knowledge or knowledge of global trends, or how various institutions actually work, just pure sentiment?

 

[tententwenty]

Is it just me, or do bull arguments seem very flimsy and not really based on any actual economic knowledge or knowledge of global trends, or how various institutions actually work, just pure sentiment?

Could it be because there aren't any valid bull arguments? Actually fair play to any bulls who have the chutzpah to step into this bear's den of a thread, in all honesty I'm open to both sides of the argument; its just that I've yet to hear good reasons to be bullish about the market from anyone. If anyone has any, please let us know...

 

[room305]

Is it just me, or do bull arguments seem very flimsy and not really based on any actual economic knowledge or knowledge of global trends, or how various institutions actually work, just pure sentiment?

Actually I haven't heard a bull argument yet that hasn't boiled down to "Ah sure, the government would never let that happen".

It seems that government endorsement of the housing bubble has led people to believe they have more power than they actually have. As happened with the Eircom fiasco, so too will happen on a grander scale with the housing bubble.

Since next year is likely to bring a downturn in property globally, I imagine Bertie and the Bumblers will blame this for any downturn in Irish property.

 

[whathome]

Is it just me, or do bull arguments seem very flimsy and not really based on any actual economic knowledge or knowledge of global trends, or how various institutions actually work, just pure sentiment?

It's not just you, none of the bull arguments stack up. The most common brainless argument is: "If I'd listened/not listened to that in 1999 blah blah blah blah".

 

[Remix]

As a lifelong IT reader, this kind of EA puke that's turning up all too often within the pages is starting to turn me off it. If it wasn't for Tom Humphries...

Let us count just a couple of ways, with regards to property commercial interests, in which the IT appears to have compromised it's own stated purpose:

"to publish an independent newspaper primarily concerned with serious issues for the benefit of the community throughout the whole of Ireland free from any form of personal or of party political, commercial, religious or other sectional control".

1. Purchased myhome.ie for 50mil+. For this investment to be successful one can imagine that they must maintain a sweet and ongoing business relationship with the countries largest estate agents.

2. David Went, Chief Executive of one of Ireland's largest mortgage providers sits on the Irish Times Trust and the Irish Times Board.

[broken link removed]

 

[MadPad]

Being one of the richest countries in the world, apparently, and still not being a net EU contributor will not have endeared us to Brussels any. They won't be doing us any favours to pull our fat out of the fire this time around, EU member or not.

Nor should they, nor should the taxpayer subsidise any loss on "investments", be that directly or with any more tax breaks than what currently exists. Or the taxpayer must not be forced to bail out the banks and credit unions who have loaned people more than they can pay back, often with a nod and a wink. Let them shave their margins if rates rise through 2007, or let them be bought out.... Screw them, they changed the rules on salary multiples...

With a general election coming, if the posts here about increasing inventory are accurate, there will be pressure to increase mortgage tax relief, abolish VAT on building materials, abolish stamp duty, abolish PRSI for construction workers, buy unsold or half completed houses as public housing, anything to keep the party going. The only one I would even consider is buying public housing provided it could be demonstrated the taxpayer was getting them "at cost" and hence not getting screwed.

I think in general Irish property is overvalued, by something like 30% to 40%. A very rough figure which I cant really defend, its just my opinion.

But over the last 10 years every threat of a correction has been faced down. Mostly by luck and events outside of our control rather than good governance. Unfortunately, the threats were then promptly airbrushed from history by vested interests and the party went on. So who knows what will happen... , we might roll another 6 again.... or we might roll a 1....

Lets see what happens...

 

[whathome]

Out of 11 auction results listed on myhome so far today (Sep 27th) ....

All 11 were withdrawn, only 2 selling after auction:

[broken link removed]