Current public sentiment towards the housing market?

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I am as bearish as anyone, but I would not underestimate the ignorance of people when it comes to property and investing!
 
Did a straw poll of the office at lunch time and apart from one Polish guy they all think I'm mad to sell up and rent.

So the sentiment here remains fairly bullish.
 
room305 said:
Did a straw poll of the office at lunch time and apart from one Polish guy they all think I'm mad to sell up and rent.

So the sentiment here remains fairly bullish.
Click to expand...

You'd rather sell though with that prevailing thought than if the straw poll said the reverse.
 
ivuernis said:
Find out here...
Click to expand...

Thanks for that link. A .25% rate increase mortgage on an average Dublin house (400k) over 35 years equates to about E700 extra per year (at current best rates - National Irish Bank). Or equivalently a 1,200k salary drop.
 
phoenix_n said:
You'd rather sell though with that prevailing thought than if the straw poll said the reverse.
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Absolutely. It's far easier to sell something when people want to buy.

It's like when Michael O'Leary was asked whether it was a good time to buy property in Poland. He said he wasn't sure about it being a good time to buy foreign property but it was certainly a fantastic time to be selling it.
 
phoenix_n said:
Thats true but its in places like here where the first rumblings are heard.
Click to expand...

I would agree. The plebs will be the last ones to find out when they read the Sunday Independent.
 
Timing the market eh....

Does anyone think waiting until interest rates start to DROP would be a good time to jump on the property wagon?
 
powderblue78 said:
Timing the market eh....

Does anyone think waiting until interest rates start to DROP would be a good time to jump on the property wagon?
Click to expand...


You might be waiting a while. Nevertheless many bubble markets have seen falling prices coupled with falling interest rates (Japan 1991-2006) Germany, UK, US etc. Falling interest rates are usually a response to recessionary episodes; an attempt by central banks to reflate in a deflationary period. Its questionable if consumers have much more capacity for debt in any case.
 
Room305,
before betting the family home, here are a few (no doubt controversial) points to consider;

[1]. interest rates may return to low levels in the next 2 years. See the cost of fixing your mortgage at http://www.bankofireland.ie/html/gws/personal/buy_house/legal_interest_rates/index.html#doclink2
1 year fixed: 4.49%
20 year fixed 5.49%

[2]. As the US dollar drops relative to the euro, this may (a) threaten to cause recession in Euro zone, (b) make exports more expensive. These factors will put pressure on the ECB to keep interest rates low

[3]. What if globalization means this time it really is different! (i.e. HousePrice /Income remains at 10 instead of 2.5) Since the economy is now more globalized than ever before, it is less likely that a situation like the UK in 1989 will re-occur. In the UK they were going into a recession but had to increase interest rates regardless because they wanted to keep the STG /DMARK constant.

See the third last paragraph in http://www.bloomberg.com/apps/news?pid=20601085&sid=aALvocHK7jks&refer=europe

[4] Interest rates are on the way up now because the Germans are confident about the future, but that confidence is likely to be shaken when the US stop living beyond their means

[5] What if Irish banks AIB and BOI are not selling up to cash in on investment. Instead their profits are lagging behind those of internet only banks.

[6] Other factors such as energy cost, and cost of goods from China starting to rise will tend to increase inflation (and influence higher rates) but it is difficult to predict which factors will prevail.

[7] It will be just a difficult to know when to buy back into a fallen market as it is to get out. While you are prepared to rent for 7 years, you will be inconvienced by landlords who want to sell up themselves.

[8] What rate will you get on your lump sum? 5% gross taxed at 22% DIRT is less than 5% on your PPR. And you are paying out rent with only minor rent relief. Calculate exactly how much you will gain by selling up now. E.g. Simulate a 7% rise in property values for the next 4 years, followed by a crash of 15% and 3 years of decline at 2%. Deduct expenses for selling, rental, DIRT tax on your savings.


The internet is a big place - make sure you research positive factors such as such a
- low tax for investors (no annual property tax in Ireland)
- low tax for corporations
- high Irish borrowing is not all just for lifestyle (growing population, investments in UK and elsewhere)
- Irish are more inclined to store their wealth in property than equities.
- stable, law abiding, English speaking


It sure is difficult to predict, and I wouldn't bet the family home on the outcome!
 
Duplex said:
You might be waiting a while. Nevertheless many bubble markets have seen falling prices coupled with falling interest rates (Japan 1991-2006) Germany, UK, US etc. Falling interest rates are usually a response to recessionary episodes; an attempt by central banks to reflate in a deflationary period. Its questionable if consumers have much more capacity for debt in any case.
Click to expand...

Good point, although waiting isn't a problem! At least I would be entering at a fixed point in time independant of any bull/bear sentiments one can get caught up in.


On another point, having read througha good lot of this thread (although not all 4x pages!), I am intrigued about where the main cast of character lie property wise. Let's be honest here, every is looking after themselves:
- If you don't own property, you want price to stay level or drop.
- If you do own property, you want prices to stay level or rise

With that in mind, how much does owning or not owning makes ones sentiment sway towards bull or bear, towards what we want to believe will happen

So duplex/305/bearishbull/bluesteel and anyother regular, do you own or not and what year did you buy if you own? ( no need to ask if you are bulls or bears :) )
 
gidxl03 said:
It sure is difficult to predict, and I wouldn't bet the family home on the outcome!
Click to expand...

Sure is difficult to predict. But we try!

But we arnt talking about the 'family home' here, are we? Given the limited financial savy of J Soap the best advice would be to hammer down the mortgage on the primary residence. That way Mrs and Mr Soap can muddle through the recession with the burden of only a SMALL mortgage.

However, there's the little issue of all those ... ahem.. 'investment' properties.
 
all you have to do is look at the property section of AAM.
some of the wise investors seem to think nothing of using all their equity in their PPR to buy overpriced 'investment' properties where the rent will not even cover the interest on the mortgage.
those guys are in over their heads from day one and are very exposed to rate rises etc.

in a way the shoe shine lads are still buying as the smart guys are selling.
there is nothing new under the sun.
if they dont learn from history they will learn the hard way.

my wife has three properties, all bought pre-2000, 70 per cent equity.
we would not even consider buying property now. that bird has left the building a long time ago.
we are considering selling one property to have beef up our cash reserve.


the fishermans brother.
 
powderblue78 said:
do you own or not and what year did you buy if you own?
Click to expand...

I own two properties and don't really care if the market goes up or down. I do however believe that we are experiencing a bubble and from current evidence, that bubble will not last much longer.
 
whathome said:
I own two properties and don't really care if the market goes up or down. I do however believe that we are experiencing a bubble and from current evidence, that bubble will not last much longer.
Click to expand...

And what evidence is that? There is no evidence, its speculation.
 
SteelBlue05 said:
And what evidence is that? There is no evidence, its speculation.
Click to expand...

I've posted several times about the evidence I'm seeing as we try to move house in the current market.
 
gidxl03 said:
Room305,
before betting the family home, here are a few (no doubt controversial) points to consider;

[1]. interest rates may return to low levels in the next 2 years. See the cost of fixing your mortgage at http://www.bankofireland.ie/html/gws/personal/buy_house/legal_interest_rates/index.html#doclink2
1 year fixed: 4.49%
20 year fixed 5.49%

[2]. As the US dollar drops relative to the euro, this may (a) threaten to cause recession in Euro zone, (b) make exports more expensive. These factors will put pressure on the ECB to keep interest rates low

[3]. What if globalization means this time it really is different! (i.e. HousePrice /Income remains at 10 instead of 2.5) Since the economy is now more globalized than ever before, it is less likely that a situation like the UK in 1989 will re-occur. In the UK they were going into a recession but had to increase interest rates regardless because they wanted to keep the STG /DMARK constant.

See the third last paragraph in http://www.bloomberg.com/apps/news?pid=20601085&sid=aALvocHK7jks&refer=europe

[4] Interest rates are on the way up now because the Germans are confident about the future, but that confidence is likely to be shaken when the US stop living beyond their means

[5] What if Irish banks AIB and BOI are not selling up to cash in on investment. Instead their profits are lagging behind those of internet only banks.

[6] Other factors such as energy cost, and cost of goods from China starting to rise will tend to increase inflation (and influence higher rates) but it is difficult to predict which factors will prevail.

[7] It will be just a difficult to know when to buy back into a fallen market as it is to get out. While you are prepared to rent for 7 years, you will be inconvienced by landlords who want to sell up themselves.

[8] What rate will you get on your lump sum? 5% gross taxed at 22% DIRT is less than 5% on your PPR. And you are paying out rent with only minor rent relief. Calculate exactly how much you will gain by selling up now. E.g. Simulate a 7% rise in property values for the next 4 years, followed by a crash of 15% and 3 years of decline at 2%. Deduct expenses for selling, rental, DIRT tax on your savings.


The internet is a big place - make sure you research positive factors such as such a
- low tax for investors (no annual property tax in Ireland)
- low tax for corporations
- high Irish borrowing is not all just for lifestyle (growing population, investments in UK and elsewhere)
- Irish are more inclined to store their wealth in property than equities.
- stable, law abiding, English speaking


It sure is difficult to predict, and I wouldn't bet the family home on the outcome!
Click to expand...


You should consider the pricing power of Irish labour in an increasingly global economy. The average Chinese industrial wage equates to about 0.70c($) per hour, similar to that in India.

Debt erosion in real terms will take much longer than before because the poorest two thirds of the global population are now offering their labour and low cost locations in direct competition to the west.

Increased incomes are a result of increased productivity, the most productive sector of an economy is manufacturing, the West is loosing manufacturing jobs while the East is building manufacturing capacity.

Its surprising that many commentators fail to mention the deflation in Japanese incomes over the past decade, as one of the reasons that Japan has struggled to emerge from their last property bubble; even with the aid of 0% interest rates.

As David Ricardo said 200 years ago;

"Labour is cheap when it is plentiful"
 
whathome said:
I've posted several times about the evidence I'm seeing as we try to move house in the current market.
Click to expand...

You posted one example from what I can see. You shouldnt assume this one example is indicative of the entire market.
 
SteelBlue05 said:
You posted one example from what I can see. You shouldnt assume this one example is indicative of the entire market.
Click to expand...

I never assume :)

You're correct - it's very difficult to judge the sentiment of a market...I suppose that's why this thread was started.

Good to hear positions from both sides - it's an interesting debate for sure.
 
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