Current public sentiment towards the housing market?

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conor_mc said:
If you must speak up against the bears, I'd suggest you make an attempt to construct a valid argument rather than resorting to mimicking.
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Speaking of bears, I'm reminded of an old joke about economists having predicted 7 of the last 2 recessions. I think it certainly rings through for a couple of bears here on a property crash.
 
Jason7 said:
Agree completly , the bottom line is the bulls do not have an argument (although it is fascinating listening to economist s from Sherry Fitz etc and their logical arguments!)
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I guess it depends on where the line in the sand is between Bear and Bull. On this site, talk of price drops seems to indicate a Bear.
Personally, I think we will have a soft landing, but i also think that would be a great result (so is that Bullish?).

All this talk of price drops is fine, but its low enough percentages (c.5%). There is definitely enough fat on the market to trim off about 10% across the board, before anyone should get worried.

The crucial thing is if/when that 10% fat-trimming occurs, if
1) prices actually accelerate again
2) if they rise slowing (perhaps in line with inflation)
3) they continue to drop

However, if a 500k house drops to 450k (10%), I think buyers will jump back into the market, so making option 2 the more likely.
 
Raskolnikov said:
Speaking of bears, I'm reminded of an old joke about economists having predicted 7 of the last 2 recessions. I think it certainly rings through for a couple of bears here on a property crash.
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In my case, I've known that Irish property was overvalued for the past few years but only turned bear in May this year. I didn't think we would have a crash until I saw the buying frenzy in the spring and then realised how messed up the market was.

I think property can be an excellent investment and have bought on that basis previously when yields were acceptable years ago. So not everyone here has been an eternal bear.
 
paddyd said:
I guess it depends on where the line in the sand is
However, if a 500k hse drops to 450k (10%), I think buyers will jump back into the market, so making option 2 the more likely.
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The monthly repayments on a 30 year, 450K mortgage now cost MORE than on a 500K mortgage a year ago. And it's only going to get worse.

The buyers will jump back in only if they can afford to.
 

But what buyers will be jumping back into the market at that price?

450k is still well above what most FTBs would be able to afford. Investors will still not be able to get a great yield from this as they'd need to rent it out for about 2,200 p/m to cover the mortage at current rates.

I think that only leaves trader-uppers in the market for the example you gave. Trying to flog their previous property to a FTB will not be so easy considering that the builders are happily providing tens of thousands of stamp duty exempt houses every year.

I think that option 3 is more likely. Until a situation is reached whereby renting and buying becomes comparable once again.
 
Debtwish said:
The monthly repayments on a 30 year, 450K mortgage now cost MORE than on a 500K mortgage a year ago. And it's only going to get worse.

The buyers will jump back in only if they can afford to.
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not the slant I was aiming for with the example ) but its a good response; Banks are not lending as much money as they were a few months back; and its naturally costing more with the rate rises.

Still I'm plugging for option 2 above
 
Debtwish said:
The buyers will jump back in only if they can afford to.
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Even when/if they do it won't be enough to soak up all the excess property coming onstream and currently being offloaded by investors. Unless they plan on buying three or four houses a piece.
 
I would not describe myself as a bull, but seeing as there have been so many requests for bullish arguements I'm going to try and construct some logical evidence for the purpose of lively debate!

The non fundamental perspective.
Bears have been using the fundamentals as a logical reason for the current stalling of house prices in the market. However, these same figures and arguements have been used for the last 5 years - and proved non fundamental. The fact that prices increased in spite of these so called fundamental laws, prove that these factors have moved from fundamental to peripheral considerations in the market. Sentiment, govenment intervention and banking lending criteria are moving from peripheral to fundamental factors.

Economic logic v's Practical logic
The common sense arguement that people will gain a better yield from a savings account today than they will from a buy to let is economically logical. However, most practical/normal people do not have reserves of cash that will earn 3.5% or 3.75% on deposit, the only way they can generate wealth is by borrowing, buying, renting, investing in the asset (in the form of subsidising rent to meet mortgage) and thus accumulating wealth based on this formula. In future the asset will be debt free - with significant value, but will also by an income stream.

Irish connection to owning property
This is one of the most overstated and misunderstood aspects of Irish property.... We do not have a connection to owning property - 50 years ago and even 25 years ago, actually, less than 15 years ago most 20 somethings were living at home or renting in a small room or flat. That was the actual social culture at the time. People were not salivating at the prospect of property ownership, they were content as they were. The amount of people in their 40s/50s who tell me how they they remember when they bought in Leixlip or Blanch that they could have stretched to Rathmines or Clontarf - but it wasn't worth the hassle.
This attitude I believe held up house price growth for many decades - very few people had their "investment property" and it was not uncommon for children to "live at home" until they got marrried. That attitude does not back up the "love of land" perspective.

Government Intervention
Interest rates, supply and demand, new house builds, age demographics are economic statistics that underpin the housing market in a logical market. However, the Irish government has had a massive influence on the develpoment of the market. Stamp Duty is/was an unnecessary form of market control by the government - which can be ammended, eliminated or increased as the governemnt sees fit. This has had a massive psychological impact on how people buy. a 2nd hand house and a new house, same size and spec. A FTB'r will pay more for the new house as there will be no Stamp. They need cash for stamp, whereas the more expensive new build will be looked after by the mortgage.
Also the impending reduction/elimination of espects of stamp on the upcoming budget or next election has a lot of people "waiting and seeing about buying"

Irish negativity v's Irish optimism
It has been accepted that up to the late 80's/mid 90's many of Irelands more aggressive and most hungry for success were forced to emigrate. Those who remained were conditioned by a Catholic society to knuckle down and get on with a formula driven life. With the advent of 3rd level education being much more widespread in this country and the graduates not having to leave as jobs now exist - the nature of an Irish person is a lot more business like and hungry to succeed and achieve. This has created a situation whereby people realise the long term benefit to property investment. A whole generation were exposed to market economics, accumulation of wealth through investment as opposed to work, risk reward ratios etc.

Try that for a start!
 
Afuera said:
I think that option 3 is more likely.
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You and all the other 'sky is falling' people on this thread


Afuera said:
Until a situation is reached whereby renting and buying becomes comparable once again.
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I think the key is negative equity. Not many will end up in that situation, even with price drops. FTB's will simply weather the storm by just not moving house. Negative equity only matters if you are trying to sell.

anyhoo, just realsied this thread is goin in circles for months; and I've said my piece (too many times perhaps!), so think I'll stick to just reading it from now on. my approach to the market to hold off for now/wait and see.
 
I think this is responsible for some of the froth in recent years!

http://www.richdad.com/

It's a huge seller, I wonder how many Irish people have been influenced.

I was looking in the business book section of Eason's recently and 50% of the shelf space was devoted to Property Ladder, Rich Dad, Buy to Let tips etc.
 
phoenix_n said:
Room305

Mind if i ask how your sale is going thru?
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Reasonably well surprisingly. Bottom of the market doesn't seem to have been as badly affected, although it is slow going. We have one bid in just short of the asking price and a neighbour informs us that he has a friend who is very interested.

If we get a bid in at the asking price we'll take it.
 
paddyd said:
You and all the other 'sky is falling' people on this thread
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In fairness, I only came to this conclusion once the ECB started to move interest rates up last December and realised how highly leveraged the Irish economy is. I have yet to see a valid argument supporting either continuing rises or a soft-landing over the long term.

paddyd said:
I think the key is negative equity. Not many will end up in that situation, even with price drops. FTB's will simply weather the storm by just not moving house. Negative equity only matters if you are trying to sell.
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I disagree. Some FTBs may lose their jobs and have no way to weather the storm. Negative equity also affects peoples ability to borrow and equity release will seem like a sick joke!

paddyd said:
anyhoo, just realsied this thread is goin in circles for months; and I've said my piece (too many times perhaps!), so think I'll stick to just reading it from now on. my approach to the market to hold off for now/wait and see.
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There hasn't been that many interesting posts the last few weeks because like you, I think everyone is holding out to wait and see what's going on. I've a feeling next December will be a critical month into how things pan out as the ECB will have another meeting (they themselves are currently waiting on certain monetary indicators to come in), the new budget will be released and the various statistics that cover the previous months market activity will finally see the light of day.
 
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No house price downturn just yet: AIB

"We expect to see a further moderation in the monthly rate of price increases over the next few months as the impact of deteriorating affordability is felt, However, the annual rate is still likely to be well into double figures by end year, "AIB said



'We still expect to see double figures for the year.....Given that there has 20+% in first three months I should think so.
 


Has the experience reinforced your 'bearish' outlook or have you become less bearish ?
 

Exactly,talk about stating the bleedin obvious

Nobody (bar maybe 1 lunatic) were predicting house prices would crash overnight,houses that went sale agreed in march/april would have only went through in june/july so we are maybe 2/3 months on the other side.
We are in the sticky period where the standoff between buyers and sellers has begun(i'm actually surprised people have been able to come up with asking price drops so soon) there is some sales but this is probably down to EA's trying to keep business going by getting some clients to "revisit their expectations" and some buyers who have not researched the market but just secured mortgage approval and off they go to "get on the ladder".There's a lot of people sitting on the fence,if prices begin to fall why would they move.

We have climbed the mountain,at the moment we are sitting on the summit taking a breather,depending on what the budget brings we may walk across the summit and then slowly down the other side or we may lose our footing and go tumbling backwards down the mountain,either way were getting off this mountain cos it doesn't go any higher !.
 

Oh dear, so investors accounted for the lending growth in Q2. I'm a bear but things seem even worse than I could have imagined.
 
phoenix_n said:
Has the experience reinforced your 'bearish' outlook or have you become less bearish ?
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Less bearish in the short term maybe since people are still spending silly money it is just the number of people doing so that seems to have dropped off.

Long term fundamentals have not changed and I expect an average of a 50% correction in real terms over the next few years.
 
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