Current public sentiment towards the housing market?

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Why do people think 35-40 year mortgages are not realistic or sustainable? They're standard practice in Japan for example
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Property prices have been falling in Japan for the last 13 years so I hardly think it serves as a great example for the wisdom of 35/40 mortgages. Certain prime Tokyo homes are worth only 10-20% of the peak value.

We are in danger of talking ourselves into a recession and property crash
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You can’t talk yourself into a recession except where the fundamentals allow

This time it CAN be different
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The new paradigm, now I get it
 
Andy Doof said:
Why do people think 35-40 year mortgages are not realistic or sustainable? They're standard practice in Japan for example.
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If you're gonna be a property bull, then do yourself a favour a pick a country that isnt an example of the destruction that property speculation can wreak..

Andy Doof said:
Certainly a lot of people in Ireland will shorten their terms and clear mortgages in a far shorter time than they were set up with.
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People who bought recently (and who buy now) will realistically only do this if they experience signifcant wage inflation. If this country's international competitiveness gets any worse..

Andy Doof said:
We are in danger of talking ourselves into a recession and property crash.
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Yup, that's right, blame the rational folk, absolve the speculators of responsibility. Sheesh next you'll be telling us "it's different here..".

Andy Doof said:
This time it CAN be different.
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uh oh..

Andy Doof said:
Properties are not overvalued by 50%.
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A hell of alot of mortgages on properties are double or more their rental cost, and this is when (a) interest rates are at at extraordinary low levels ("new math" anyone?) and (b) rental demand is being exaggerated by (IMO) temporary migration (due to the construction mania).

Andy Doof said:
As we reach equilibrium
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I'd see Equililibium as Genuine Demand = Supply
Currently IMO we have something like:
(35% Genuine Demand + 25% FTB panic/fear + 40% pure speculation) = Supply.
 
Firstly I believe a property is worth what someone is willing to for it.
I also believe that the vast majority of mortgages of 30 years or more will be paid off far earlier. This property boom is a product of the relatively small number of very large family homes in Dublin. These have gone up 10, 20, sometimes thirty fold and the equity has been ploughed back into investment properties, homes for 20 and 30 something children and overseas property. These large homes and the pension legislation governing the self employed ARE THE BOOM. They filter right down through the market, influence the market in every town, every county.
 
40 yr mortgages are fine for people in their 20's or maybe their 30's, but for FTB's in their 40's or trying to trade up then its not a great option due to them being retired after ~20 years of the mortgage and the banks take their age profile and increased health risks into account too.
 
miju said:
i'd have to agree with MadPad here Arthur , I mean everyone is obviously thinking the same as the rising inventory levels clearly indicate
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Fair enough, I'll be ok I can also ride out an armageddon if needs be as I've a low LTV. I know that not everyone who has bought in the last 5 years is as lucky (think 40 year terms that made sense at the time, interest only mortgages, 100% ltv etc..). My point is that it'll take a fair shift to change sentiment and attitudes in Ireland, partially because of the fact that a very sharp serious housing crash hasn't happened here in most peoples memory. I think a tipping point for a meltdown hasn't been reached yet by any means.
 
I am not one of these "this time it's different" merchants.
I believe prices will fall in some of the ludicrous places apartments and houses are being built. Speculators will not have it AS easy.
But there will be no bear market. Would you honestly advise someone with a 3 Bed Semi in Dublin to sell now, put the proceeds on deposit and buy a far superior property when the market collapses?
 

35-40 year mortgages are generally sold on the basis that no one will actually have to go the whole way through them; that they will re-mortgage at some point within a couple of years on "better" terms. And that's fine in a rising market, it's fine in a falling interest rate market, it's fine in a rising-wage market.

But if you're taking out a 35 year mortgage, you really should also look at a worse case scenario of "what if we can't remortgage?" There have been more than a couple of people looking for advice falling "Bank says we can't remortgage/release equity..." which suggests that you can't actually take it for granted.

Not only that, you have to be relatively young taking out out a 35-40 year mortgage. That means locking down your life at a relatively young age which is fine if you know you're not going to want to travel or doing anything. Interestingly enough I emigrated when I was 21 and came back when I was 27 at which time I was ready to settle down, and most of my friends were bemoaning the fact that they were slightly locked down, couldn't really make any free decisions because of boyfriends/pension considerations/career prospect considerations.

The fact that 35-40 year mortgages may be standard somewhere else (and choosing a property imploded market like Japan is not a good example) does not make them, per se, a good thing. Personally speaking I think it should be feasible to pay back a mortgage on an average salary in 25 years - and we wouldn't have a bubble if in fact, mortgage lending criteria hadn't been eroded in two key ways - salary multiples and mortgage terms. Mostly, people who are going 30-35 years are right on the limit of their affordability. We did this at a stage when interest rates were historically low, and currently they are travelling up. This makes the position of people on the limit of their affordability very...precarious.

You seem to give me the impression that a property crash is undesirable. The problem - as I see it - is that an irrationally exuberant property market is equally undesirable and a crash is an undivorceable partner of that. This is really a statement of the obvious but if property values hadn't skyrocketed the way the did over the past 5 years, then we wouldn't be looking at any sort of correction. The property market, as it has behaved over recent years has highlighted planning issues, exacerbated traffic problems and in general, is an example of a lack of joined up thinking in terms of how we want to plan the country going forward. Rocketing growth is not desirable either but I don't see the beneficiaries of that complaining too much, do you

I'm interested to know why you have reached the opinion you did, namely that:

1) property is not overvalued by 50%. Every single person who claims it is backs up their view with some supporting argument. I'd like to see yours.

2) why can it be different here?

3) There are examples of prices falling across the more salubrious parts of Dublin which you reckon will see slowing growth (but not falls, from what I can understand). It is falling in less salubrious parts of Dublin. It's also falling outside Dublin.

I'm generally mistrustful of those who try to localise falls and rises in a slowing market. The truth is the rising tide raised a lot of boats and some of those boats got raised a lot further. I'm of the opinion that the higher a property went - proportionally - the greater its scope for falling. There seems to be this mantra that rich parts of Dublin will somehow escape the worst of a housing correction.

I assume, normally, that rich people don't get rich by being stupid. I'd be willing to bet that most of them will be happy that they don't have to sell because if properties are not being sold, then you can't assess their market value.
 
Andy Doof said:
Would you honestly advise someone with a 3 Bed Semi in Dublin to sell now, put the proceeds on deposit and buy a far superior property when the market collapses?
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well given the fact that asking prices are dropping quiet significantly across the board INCLUDING Dublin that wouldn't be a bad suggestion
 
I have been informed by a certain person in Newstalk that they were aware of who was on the show this morning talking about the property market but those with the view that things are going to go wrong are keeping their head down! Not sure how true this is! Anyway i was told they will redress the piece tomorrow so might be worth a listen..... Will be interesting to see who they get on if anyone at all!!!!
 
I believe that the less desirable the property/area, the more it is overvalued. The 3 Bed Semi in the commuter belt is the most overvalued of all.
The more exclusive areas have a finite number of properties...so demand will always be there.
I see the market stetching out from Dublin 4, out into Dublin 6, into Rathfarnham, out west, out north, up to Balbriggan, out to Naas, down to Gorey.
Any fall in prices brings all those people concertina like back into Dublin back up the food chain.
That's why the higher you are up that food chain, the safer you are.
 
Andy Doof said:
I believe that the less desirable the property/area, the more it is overvalued. The 3 Bed Semi in the commuter belt is the most overvalued of all.
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even worse than the 3 bed semi is the 1 or 2 bed apartment in the middle of nowhere.........

I think this point is fair enough and borne out in the supply seen on daft. Places like Drogheda and Mullingar have a huge number of properties (i.e. 250) for sale considering the size of town/city.
 
Prices are not "dropping significantly" across Dublin!
People are putting what had become the usual ludicrous reserves on properties and they haven't realised them. There hasn't been price deflation. Look at developers launching new phases...are the prices lower than they were before. We are seeing the soft landing most people want to see...not the crash most Joe Higgins/Irish Times moraliser wants to see
 
Andy Doof said:
Why do people think 35-40 year mortgages are not realistic or sustainable? They're standard practice in Japan for example.
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I'm just back from househunting in Japan and went into a few lending institutions too. From what I saw, Japanese usually pay a 20-30% deposit when buying houses and most take out 20-25 year mortgages with at least the first 10 years fixed. I said in a previous post that I could have gotten a 20 year fixed rate mortgage at 3.18%.
Apart from the 5 central districts in Tokyo(out of 23) and some parts of Osaka/Nagoya house prices in Japan are extremely cheap.
 

This is a typical response and has been pointed out on this thread numerous times. The "it might fall elsewhere but it won't fall here because ..."

If prices fall in Balbriggan, or Gorey or wherever, those people aren't gonna have a whole lot of disposable cash or borrowing power to start getting involved in price wars for D4 property.

Without a steady stream of FTBs to prop up the pyramid everything will fall from the very top all the way down to the bottom.
 
Have you not been paying attention? There have been examples given of houses sold for less than neighbouring ones went for earlier in the year. Also examples of new phases not commanding the same prices as earlier phases did in the same developments at the peak this spring.

Agreed, it's not a "crash" yet - we're just getting started. But I don't think it will be a "soft landing" either.
 

I'm fascinated. Previously it was "oh it's the summer, nothing's moving" and now it's "people were asking for silly prices, now they're facing reality". People have been asking for ludicrous prices for the past five years. The difference is that now they are not getting them.

Inventory is rising pretty much every day. Almost the only way a soft landing can be managed is if inventory is very carefully managed vis a vis the number of buyers. Unfortunately, neither can be. You can't go to a buyer and say "please buy this" if that buyer thinks "hell if I wait six months, they'll come back and say 'please buy this for ten per cent less than they are asking now'".

Why should they buy to protect someone else's interest? We're not in the business of protecting the market. The market is cold. For five years it has been fleecing buyers. Now the sellers are starting to feel a little cold.
 
Which developments? Name them. name a development where a phase being launched right now is cheaper than a previous phase.
 
A house with an AMV of 1.8 Million is withdrawn or there are no bids and they're now quoting 2.1 Million...yeah that's a massive crash
 
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