Current public sentiment towards the housing market?

[ivuernis]

I think many are calling the end of the Irish property mania too hastily. Yes, we have evidence of asking prices being lowered and a slow market, however, what we can not ascertain for certain just yet is if this is a fundamental change in sentiment or a temporary stand-off while we wait to see (a) how far more the ECB take the interest rate hikes and (b) what changes the government may take on stamp duty in the coming budget.

If, and I'm postulating here, the ECB stop at between 3.5% and 4.0% (I think there is a good chance they will do this in 2007 whilst not discounting further rate hikes down the line in late 2007 onwards) and the government abolishes stamp duty for FTBs on new or secondhand houses upto 381k then I think there is fertile grounds for an upswing (abliet a minor one) in 2007. In such a scenario FTBs who may now be sitting on the fence in 2006 will come back to the market, thus re-invigorating prices up the chain. Gains will be small, in the low to mid single digits, but enough so that the oft hoped for "soft landing" will have been proclaimed to have arrived lulling most into a false sense of having dodged the bullet in Ireland (because don't forget people things are different here!)

The ECB, having initially reined in inflation (temporarily) due to current monetary policy coupled with a stable oil price floating around $60 barrel and a steady but not inflationary growth in the Eurozone will be forced at some stage to start ratcheting up rates again when (and it's just a matter of when and not if this happens) oil prices really start to go up, i.e. $100+ barrel. The Irish property market, having being lulled into the false dawn of a soft-landing and a belief that rates will not go much higher than 4.0% will suddenly be faced with another tightening cycle by the ECB but this time there will not be no escape route via SSIA money or further changes in stamp duty rates. Then the Irish property bubble will truly be put to the test.

Just my current thinking on where this is all headed. Feel free to rip it to shreds or convince me otherwise but I think there may be a few more twists and turns yet which may delay the inevitable for another while.

 

[onekeano]

The demand for property is still high - 40% from investors.QUOTE]

Where does this come from? I'm an investor and have been back to around '97. I know lots of people who have been investing since around then. NOT ONE of them would be investing at todays prices and obviously lots have been cashing in over the last 12 months.

I can't / don't believe that 40% of units are being bought by investors - if that were the case rents would have dropped significantly over the past 12 months.

Can you please provide the relevant source for this statement?

Roy

 

[Bedsit]

Just my current thinking on where this is all headed. Feel free to rip it to shreds or convince me otherwise but I think there may be a few more twists and turns yet which may delay the inevitable for another while.

However if investors decide that it is time to get out, and stop buying investment property, then we will have house completions in the 50K range. This will mean lower employment in the construction sector, which will in turn affect other dependent sectors. Also, a housing slow down in the US and a possible recession will have a bearing on jobs. If the jobs go then the immigrants will leave etc etc.

I think there are just too many variables in the equation and it is difficult to predict how quickly or slowly sentiment might change.

 

[whathome]

Can you please provide the relevant source for this statement?

I didn't make the original point but it's pretty clear in this sherry fitz report:[broken link removed]

Buyer Classification: 40% investors....see the pie chart.

 

[MadPad]

Very little discussion about yesterdays Sunday
How do people feel about the OECD report which painted a more positive picture than is portrayed here?

People here are in a kind of a "negative feedback loop" which is just as silly as the "boom will go on forever" feedback loop that went on for the last few years in the real world. I suspect that as prices drop, sentiment here will change to stay even more negative that the real world.

 

[redo]

The demand for property is still high - 40% from investors.QUOTE]

Where does this come from? I'm an investor and have been back to around '97. I know lots of people who have been investing since around then. NOT ONE of them would be investing at todays prices and obviously lots have been cashing in over the last 12 months.

I can't / don't believe that 40% of units are being bought by investors - if that were the case rents would have dropped significantly over the past 12 months.

Can you please provide the relevant source for this statement?

Roy

What I meant to convey was that 40% of all new builds in the first quarter were from investors.

 

[Duplex]

That's the problem with the Irish housing market, risk is not being priced in. Current valuations are based on the remotest of remote possibilities that the present extraordinary circumstances will continue in perpetuity. We are in truth witnessing mania; pure unadulterated frothing at the mouth stuff, make no mistake about it.

 

[mortimer33]

I didn't make the original point but it's pretty clear in this sherry fitz report:[broken link removed]

Buyer Classification: 40% investors....see the pie chart.

It also says that 30% of vendors were investors.

 

[Art]

I didn't make the original point but it's pretty clear in this sherry fitz report:[broken link removed]

Buyer Classification: 40% investors....see the pie chart.

I am amused to see that this figure being quoted by Sherry Fitzgerald is deemed by the bears to be gospel wheres all of their upbeat statements are considered pure rubbish or simply untrue by those same bears.

 

[redo]

I am amused to see that this figure being quoted by Sherry Fitzgerald is deemed by the bears to be gospel wheres all of their upbeat statements are considered pure rubbish or simply untrue by those same bears.

Slight difference. The figures from the 2006 Q1 season were statistics produced from sales.

 

[Duplex]

Irish property investors have a choice, they don't have to invest in Ireland. If investment prices stagnate (with negative rental yields) then it is reasonable to assume that Irish investors are probably likely to stop buying in the Irish market. What happens to a market when 40% odd of the demand gets zapped?

 

[Duplex]

I am amused to see that this figure being quoted by Sherry Fitzgerald is deemed by the bears to be gospel wheres all of their upbeat statements are considered pure rubbish or simply untrue by those same bears.

Quote where figures from Sherry Fitz are questioned? Please.

 

[phoenix_n]

Phibsboro terrace price decreased from to [broken link removed]

And all the kings horses and all the kings men.....

Now dropped to [broken link removed]

..couldn't put.....

(p.s. watch 9 st ignatius avenue fall from current [broken link removed] price)

 

[Art]

Quote where figures from Sherry Fitz are questioned? Please.

Alot of the reductions seem to be sherry fitz - at little at odds with uber economist finnegan

There is a article in the current Irish Property Buyer which Marian Finnegan says that now is a good time to buy. Surely she has lost all credibility at this stage.

Have the property gurus really got it right?
http://www.unison.ie/irish_independent/stories.php3?ca=36&si=1702104&issue_id=14741


And how much of that is centered on the construction industry?


*cough* Really? From an article last year in the Indo, http://www.unison.ie/irish_independent/stories.php3?ca=303&si=1469805&issue_id=13008:

One more quote from today's article (by ESRI economist David Duffy):

No comment on that one...

 

[whathome]

I am amused to see that this figure being quoted by Sherry Fitzgerald is deemed by the bears to be gospel wheres all of their upbeat statements are considered pure rubbish or simply untrue by those same bears.

The numbers were never questioned, the upbeat statements were indeed pure rubbish. Nobody argued with the data, they argued with the ridiculous forward looking statements. What's wrong with that?

The discussion today was about data regarding buyer classification. Duplex asked you to show where the figures were questioned, we're still waiting.

 

[conor_mc]

I am amused to see that this figure being quoted by Sherry Fitzgerald is deemed by the bears to be gospel wheres all of their upbeat statements are considered pure rubbish or simply untrue by those same bears.

In fairness, what Sherry Fitz say they think will happen and what their statistics say has happened are two different things.

The 40% statistic is interesting because SF used it to talk up the market, saying investor activity was strong. Bears used it to talk down the market, saying that this was speculative activity and was indicative of an imbalance in the market.

So the bears still disagree fundamentally with SF opinion, without necessarily disagreeing with their stats.

 

[BigM]

Just my current thinking on where this is all headed.

I agree with ivuernis - there are still enough rabbits left in the hat to stave off a collapse in the near-term, but by Q4 2007/Q1 2008 I reckon not even Houdini could escape from the bursting bubble (apologies for mangled metaphors).

On another, related point: one crucial difference between Ireland and the US w.r.t. foreclosures is that it is very difficult for banks here to reposess family homes, given the Constitutional protection afforded to the family. (Investors are obviously a different story)

 

[room305]

On another, related point: one crucial difference between Ireland and the US w.r.t. foreclosures is that it is very difficult for banks here to reposess family homes, given the Constitutional protection afforded to the family. (Investors are obviously a different story)

What if it is not the banks doing the foreclosures but the international hedge funds to which they have sold the mortgage debts?

 

[darex]

On another, related point: one crucial difference between Ireland and the US w.r.t. foreclosures is that it is very difficult for banks here to reposess family homes, given the Constitutional protection afforded to the family. (Investors are obviously a different story)

Are you sure about this?. It dosen't make sense in one way because the bank has much less protection against people defaulting - and surely they must have some knid of protection against people defaulting in order to lend in the first place?

It does mean that if it is true that prices will have an extra stickiness that they wouldn't have in the US on the way down.

 

[Duplex]

I agree with ivuernis - there are still enough rabbits left in the hat to stave off a collapse in the near-term, but by Q4 2007/Q1 2008 I reckon not even Houdini could escape from the bursting bubble (apologies for mangled metaphors).

On another, related point: one crucial difference between Ireland and the US w.r.t. foreclosures is that it is very difficult for banks here to reposess family homes, given the Constitutional protection afforded to the family. (Investors are obviously a different story)

I'd imagine that the buyers of mortgage backed securities issued in Ireland would be 'disturbed' to discover that they would be unable to liquidate their asset if the mortgagee were unable to pay up. It would be interesting if a case went to court on this constitutional point where a repossession was sought by the mortgage holder . The court might allow repossession but not vacant possession i.e. allow the occupants remain as tenants of the mortgage holder. I'd imagine that a ruling of that sort would cause mayhem in the Irish MBS market.