Current public sentiment towards the housing market?

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sandymount said:
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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I think Sarah's right about a large block of people, who will mindlessly continue subsidising tenants rent to pay mortgages back, even if prices stop appreciating. With couples of course the SSIA boost is more like 500 euros.

As a renter you can just sit back and enjoy the prospect of people fighting with each other to subsidise your lifestyle.
 
Sarah W said:
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
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how many quarter point interest rates hikes == 254e per month on an IO mortage of 300k?

where does the capital appreciation come from in years to come with a stalled market?

how's about people who have already released equity on the PPR to fund investment properties and interest rates hikes are hitting both these properties? doesn't sound like sound investment to me?
 
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Sentiment can change on a dime. Sentiment IMO has changed. Prices were only going up because prices were going up--- think about that crucial concept for a moment. Now consider that prices have stopped going up. What happens next? hmmmm. Buying property now would be the epitome of poor timing.
 
Be nice to Sarah! She's the the only admitted property industry professional we have on the thread! We should at least give her a chance to defend the industry!

*puts bear suit back on*
 
Sarah W said:
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
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First of all, thanks for pushing some bullish arguments - don't get a lot of this around here!

However, I think that for many the interest rate rises will eat up this spare cash. There was a great piece doing the rounds earlier on this thread pointing out that the mortgage repayment for many average mortgage holders would jump by more than the SSIA monthly savings amount as they come off their "First year special fixed deal"

And will they keep pushing money into property if the capital value is seen to fall when they are already subsidising the rent each month? I realise some will stay in "for the long term" but I don't think a lot of recent buyers of investment property will stay in for that long once it starts to become apparent that their one-way bet is not paying off (literally!)
 
comanche said:
how many quarter point interest rates hikes == 254e per month on an IO mortage of 300k?

where does the capital appreciation come from in years to come with a stalled market?

how's about people who have already released equity on the PPR to fund investment properties and interest rates hikes are hitting both these properties? doesn't sound like sound investment to me?
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1% = €250 per month.

I'm not saying it's right or wrong or a sound investment - just an observation. I was a mortgage broker in London '87-'94 and saw some people who lost everything by either panicking or, more commonly, by being backed into a corner by unsustainable mortgage payments or negative equity. Those who hung on (generally speaking) came through.

However I am NOT likening the current Irish property market to the UK one of the early 90's. That was due to three specific events; the cutting of interest rate relief from per person to per property (but with a 4 month lead in period), the availability of 110% low start mortgages and interest rates jumping from 11% to 15% in one day (the actual day I closed on a purchase!).

I'm neither a bull or bear, BTW.

Sarah

www.rea.ie
 
Good to have you on board Sarah W.

Can I ask how the mortgage market is going at the moment?
(I'm not being sarcastic, I'm genuinely interested)
 
I think that sentiment still hasn't changed yet to be honest. People still view property as an investment that will only go up.

For example my sister rang me asking me if I was interested in going halves on a property she saw on Location Location the other night!

I think that your average Joe is too busy commuting 3 hour to work each day, getting whatever time they can with their children, and getting ready to do it all again the next day to keep an eye on what is happening. They are not reading into the effect of rising interest rates, the US on the brink of recession with a crashing housing market. They are not aware of the soaring prices of commodities coz of India & China developing their infrastructure. The are too involved in the own lives and fell safe in the fact that their house(s) are now with x, that they have their little nest egg. Until its hurts people don't care!

The property only goes up mantra is too deeply ingrained for them to worry about interest rates going up.

I think that Sarah has a point that the extra SSIA cash will help the average joe to ignore interest rate hikes, that it won't hurt them too much.

The biggest threat is the fact the FTB's affordability is decreasing with each interest rate hike, this will depress the market somewhat, will it knock a few rungs out of the ladder - I dunno. Six months ago I was telling my friends it would and that's why I have stayed out of the property market, I am not so convinced that we will see this happen in the immediate future. If rates do not rise in 2007

I do expect the next 5-10 years to be a rough ride for Ireland though as it realises the rubbish infrastructure it has to deal with as energy & commodity prices continue to soar. And as for the mountain of debt that will have to be services well that's another story!
 
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comanche said:
I think that sentiment still hasn't changed yet to be honest. People still view property as an investment that will only go up.
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I think you are wrong here. The money is leaving the market and those that still buying are doing so without all the facts to hand.
 
phoenix_n said:
I think you are wrong here. The money is leaving the market and those that still buying are doing so without all the facts to hand.
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Yes the smart money is leaving the market! :)

They less well read are staying in the market or are just joining the party.
 
Sarah W said:
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
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It's a good point Sarah, but it neglects one thing. And that is that the majority of these people will view their property as a "pension" because regular pensions just aren't fashionable anymore..... too many stories of Joe Soap losing his hat because the pension company didn't move his money into less risky investments as he neared retirement. That Joe should actually have been responsible for this himself is lost on these people.... their thinking on it stops at "the pension company ripped him off".

We've seen it with eircom too, the psychologically-scarred masses who think shares are "too risky".... neglecting the vast variations of risk within the equity markets.

Now jump forward 4/5 years, post-crash if it happens, and what will be the next most-reviled and -hated asset class.... that's right, property. Sure you'd never live on the rent from a single house, they'll say. And they'll be absolutely right, except that some can see that obvious fact today.
 
comanche said:
For example my sister rang me asking me if I was interested in going halves on a property she saw on Location Location the other night!
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That sounds very strange - location location is a UK property programme and as it's recorded, runs behind the market. Also - the latest series ended on Channel 4 weeks ago. The only episodes currently showing would be ancient repeats showing on Discovery Realtime (Satellite).
 
NewMan said:
The OECD report of a few weeks ago contradicts this report. Is that a good enough source????
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Have you actually read the report released by DeutchBank on 11th Oct? This report says that the Irish property market is at the 2nd highest risk of crashing in the EU. Can you show me where the OECD contradict that view?
 
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