Current public sentiment towards the housing market?

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There is an election next year and the stamp duty card is about to be played for short-term votegetting impact - the question politicians are asking themselves is how do we keep the feelgood factor high until the day after the election. Stamp duty, SSIA's etc all fall into the same category......political selfserving game playing
 

IMO, the bulls have taken to the "it's all about uncertainty in stamp duty" message as the "safe/politically correct" explanation about why the market is wobbling/starting to fall in places to make everyone feel more confident that everything's still ok. I believe that we are in the early stages of a sentiment shift and stamp duty is a relatively minor issue.
 

Sorry if it sounded like I was having a go, I tend to have a very abrupt writing style

It's got nothing to do with the wage costs though. You have to understand that prices are set at the margin i.e. something is only worth what the last buyer was willing to pay for it.

If buyers are only willing to pay €5 for widgets, then the market price of widgets is €5. Buyers neither know, nor care, that it costs WidgetCo €6 to make the things. In this case, either WidgetCo is inefficient, or the market no longer values widget production, and so resources will move from widget production to making something else that the market values higher (and at a profit). This is the fundamental essence of capitalism and market economics. And no, property isn't "different".

The cost of production, or the replacement cost, or the rebuild cost, is completely irrelevant in terms of setting prices. Those things matter only to insurance companies, and nobody else.

Prices are set by supply and demand - by the number of buyers, what they are willing to pay, and the number of units available for purchase.

To take it one step further, in housing we usually have second and third and fourth hand buyers. The cost of production was only remotely relevant the first time the house was sold - and then only relevant to the builder and whether or not he was going to make a profit. The first buyer neither knows nor cares whether the builder will make a profit. And when he sells on, he will get precisely what the second buyer is willing to pay - no more, no less. And the second buyer certainly doesn't care what the house cost to build x years ago.
 
[IMO, the bulls have taken to the "it's all about uncertainty in stamp duty" message as the "safe/politically correct" explanation about why the market is wobbling/starting to fall in places to make everyone feel more confident that everything's still ok. I believe that we are in the early stages of a sentiment shift and stamp duty is a relatively minor issue.


Neffa. Where do you think it will be after the budget ?
 
Give first-time buyers VAT back - CIF

http://www.rte.ie/business/2006/1016/construction.html

Nice one! What about all the poor old FTBs, scapping and saving for the last 3-4 years of this irresponsible bubble.............

Give it a few years and tv in Ireland could be littered with those ads you see on cable channels in the UK. You know - claim later on you were missold a mortgage or how to consolidte your debt that has got totally out of hand.
 
Why don't the CIF just reduce the price of their new builds by the VAT equivalent if they are so concerned for the poor old FTB. There must be a huge number of cancellations for their members for them to kickstart this poor man act
 
What do you think the market will do if there are no changes in stamp duty in December's budget.
 

Absolutely sickening. This is all so unbelieveably predictable - weren't we discussing on here already how the gubberment will be called upon to bail FTBers out of the unsustainable mess they've found themselves in? I can just imagine the kind of taxation gymnastics that the CIF have in mind...

My tax money being used to buy votes and dig FTBers out of holes effectively enriches the most powerful lobby groups and I will leave this country should this happen - Oz looks like a good place these days - I believe there's a shortage of people with my skills over there at the mo.
 
topman said:
What do you think the market will do if there are no changes in stamp duty in December's budget.
Click to expand...

So, my opinion since you asked is:

1. Even if we get interest rates sticking at 3.5%, I suspect that 2007 will see no upward price movement in the market. Expect sales cycles to continue to lengthen and the "buyers market" mindset to become more entrenched. Investors will slowly drift away given negative yields and the promise of capital appreciation vanishing in front of their eyes. Affordability is running away from buyers through rate rises faster than wage rises and clever financing can catch it. Net result - they can afford less at the bottom of the market and prices (slowly) readjust accordingly. SSIA money will offer some protection but that will fade by autumn 2007.

2. If rates increase to 4.0% or higher, I expect a more sudden change in sentiment as the IO mortgage rises for investors really start to bite and expect a large number of novice investors to get scared and try to get out. (Bear in mind that an investor with an IO mortgage will have seen repayments rise by 60-70% in an 18 month timeframe while rents rise by 5% if at all.) If this plays out, then expect to see some obvious (15-20%+) price drops across the board. SSIA's will not make such an impact as the confidence drains from the market more quickly.

I firmly believe that we are all about to learn a painful lesson that "prices can do down as well as up." You should see the looks of astonishment I have had in work from showing people the "falling prices" blog. Once this becomes better understood, then people will get very wary.
 
Deutsche Bank Research "US house prices declining: Is Europe next?"
[broken link removed]

"Ireland achieves the highest overal risk score with 6.4 points, followed by Spain with 5.9 points. Thus, our model identifies these 2 countries as the ones where house prices are most likely to correct without any external stimulus"

"We therefore feel confidend that spain and Ireland can be considered the European countries with the biggest housing market risk"
 

This is the power of the internet. It is a weapon of truth fighting against the vested interest controlled media. Newstalk et al can spin all they like for 10 mins every other day, but this thread (and countless others on other sites) will always be around 24x7 for those that really want to see what is happening out there.

Compared to other property markets around the world the Irish one is very small. Therefore, once sentiment turns it could turn very quickly. And the internet could play a very important part in that.
 
Anybody care to guesstimate the number of unsold section 23 properties currently on the market? I'd guess there must over 5,000 out there and the prices of these will drop heavy after December 31st.
 


I can see the rubbishing of this report....Ah what would those Germans know anyway, sure didn't we break the mould when it comes to having a successful economy, who are they to be lecturing when they have ~10% unemployment ...etc. Maybe Mr Gilroy on Newstalk can get a few sages on tomorrow morning to put this one to bed..
 

Shhhhhhh!!!! Someone's gonna have a lot of work to do counteracting that report if the general public get wind of it!
 
One point (I don't think) anyone has raised as yet is that a great many amateur investors will have €254/€508 a month in spare cash each month once the SSIAs come to an end and may divert this money to subsidise their investment properties against increased income only mortgages. From my experience these properties are viewed as long term investment and an additional/alternative pension fund or their children's inheritance and it will take a lot for them to abandon this mindset.

Sarah

www.rea.ie
 

Sarah I am very interested in one of your income only mortgages, can you send me some details?
 

The OECD report of a few weeks ago contradicts this report. Is that a good enough source????
 

People view it as a long term investment until the value starts falling. Investor sentiment can change if prices level off/fall.
 
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