Current public sentiment towards the housing market?

[CelloPoint]

On paying rent when your in old age-why would u live in poverty.

78% of German households rent and we don't hear scare stories about these pensioners living in poverty.

As well if u put the savings from renting over paying a mortgage,u should have a very nice nest egg when u reach retirement age.

I'm currently putting $30k pre tax into my pension pa-this will leave me with a very nice nest egg at 60 where I will have the option of buying house outright(or getting an indexed linked pension which I plan to do)

Theres' so much fear out there of missing out on the property ladder,reminds me of the dot com bubble

Exactly. And if you had a 40 year mortgage, what's the difference? You'll be paying well into retirement anyway.

 

[ivuernis]

Yes but Germany France and Italy (for whom the ECB rates are set not for us) were in recession then, thats why rates were coming down EVEN before 911 when the emergency 2% rate kicked in.

I know the reasons why rates dropped then, I was just replying to someone who said prices had dropped in Ireland in 2001 even though rates dropped and while it's true there was a small drop in late 2001 year-on-year prices were still up on 2001. Previously in 2000 rates had risen before they began to fall again which surely had some time-lag effect on prices in late 2001 alongside the general world economy post-dot-com sentiment.

A rate cut cycle is some way off at present and a prudent person would have to plan for a plateau of 6% mortgage rates meaning base around 5% Base is 3% from today.

I don't see a rate cut cycle coming anytime soon either baring some unforeseen(s) event forcing a cute.

 

[whathome]

Ok, drop in Dec is agreed but over the course of the year prices were still up.

December was the fourth consecutive monthly drop in house prices in 2001.

I agree with Duplex, the factors which saved the market in early 2002 no longer exist:

- government reversed the Bacon anti-investment measures
- rental yields were much higher
- prices were far lower relative to income
- supply was much lower

None of these apply any more, the situation is far more dangerous now.

 

[CelloPoint]

December was the fourth consecutive monthly drop in house prices in 2001.

I agree with Duplex, the factors which saved the market in early 2002 no longer exist:

- government reversed the Bacon anti-investment measures
- rental yields were much higher
- prices were far lower relative to income
- supply was much lower

None of these apply any more, the situation is far more dangerous now.

I agree with your use of the word 'dangerous'. It's a strong word, but I believe the market deserves such a word because it is just that, dangerous. There are far lower risk, guaranteed investment options out there for any even mildly intelligent investor. In my opinion, this very fact (coupled with an emergence of fear) will be the instigating factor in the mass selling of so-called 'investment' properties.

 

[dontaskme]

Correct me if I'm wrong, but isn't inflation at the moment being caused primarily by rising energy costs, rather than consumer demand (europe wide, not Ireland!), which feeds into the price of goods.

There will be a 3% increase from 16% to 19% in VAT in Germany in 2007 and I reckon some of this increase is being front loaded now so that producers/service providers won´t have to bump prices up 3% on 1 Jan.

 

[ivuernis]

I agree with Duplex, the factors which saved the market in early 2002 no longer exist:
- government reversed the Bacon anti-investment measures
- rental yields were much higher
- prices were far lower relative to income
- supply was much lower
None of these apply any more, the situation is far more dangerous now.

I totally agree.

 

[Duplex]

Since there were 86,000 or so new properties built in 2005, would that mean that the size of the second hand market in Ireland was only about 34,000 units in 2005?
Surely that can't be right?

Claims from some real estate agents about 40% of new builds being bought by investors would suggest that around 35,000 units were bought by them in the same period. If all of those investors dumped their properties on the market it would effectively double the supply of second hand homes!

Someone tell me I'm wrong here, please.

There is a 'lot' of silly money flying about the Irish market at present. If you consider that each of these new properties was worth say €250,000 that amounts to €21 billion looking for a home or twelve.

 

[liteweight]

"Prices go up in the long term", "rent is dead money", "safe as houses", "can't raise a family in a rented home", "prices can't crash where will people live", BUY NOW or "all hope of buying is gone"

What dull, repetitive, un-thinking dogma.

Last time I looked, this was a thread on Current PUBLIC sentiment towards housing market...not walk2dewater's sentiment. I'm entitled to my view just as you are but there's no need IMO to be rude or obnoxious when voicing it!! Perhaps you should open a new thread on this where you can talk to yourself and only take your own replies on board.

As to the other poster who thinks I probably only read the Irish Times Property Supplement, well yes I do..and Business and Finance and numerous others sent to me by my Financial Advisors!

And yes..I do go off to my villa in Spain and didn't manage to acquire any of my properties through dull, repetitive thinking.

In the immortal words of Billy Connolly "Don't pity me....I'm f****** loaded!!!! If I'd listened to the likes of you God knows where I'd be!! As for 'dogma' why not try reading back through your own posts!!!

 

[redo]

Last time I looked, this was a thread on Current PUBLIC sentiment towards housing market...not walk2dewater's sentiment. I'm entitled to my view just as you are but there's no need IMO to be rude or obnoxious when voicing it!! Perhaps you should open a new thread on this where you can talk to yourself and only take your own replies on board.

As to the other poster who thinks I probably only read the Irish Times Property Supplement, well yes I do..and Business and Finance and numerous others sent to me by my Financial Advisors!

And yes..I do go off to my villa in Spain and didn't manage to acquire any of my properties through dull, repetitive thinking.

In the immortal words of Billy Connolly "Don't pity me....I'm f****** loaded!!!! If I'd listened to the likes of you God knows where I'd be!! As for 'dogma' why not try reading back through your own posts!!!

walk2dewater you have just been b'tch slapped.

 

[whathome]

I'm entitled to my view just as you are

Liteweight - your views are valid and welcome.

Quick question though - is there some point at which you would re-evaluate your investment properties based on profit, yield etc.?

I purchased an investment property in Dec 2001 and am currently selling it. I've seen the price rise to a level that doesn't make sense relative to rental income. My view is that with rising interest rates, many other investors will take a profit rather than subsidise tenants. Do you think you would you ever realise a profit and sell?

 

[room305]

In the immortal words of Billy Connolly "Don't pity me....I'm f****** loaded!!!! If I'd listened to the likes of you God knows where I'd be!! As for 'dogma' why not try reading back through your own posts!!!

How much of this wealth is realised and how much is tied up in property? I'd be very nervous if all my equity was tied up in an illiquid market when we're in such an uncertain economic climate.

 

[CelloPoint]

Last time I looked, this was a thread on Current PUBLIC sentiment towards housing market...not walk2dewater's sentiment. I'm entitled to my view just as you are but there's no need IMO to be rude or obnoxious when voicing it!! Perhaps you should open a new thread on this where you can talk to yourself and only take your own replies on board.

As to the other poster who thinks I probably only read the Irish Times Property Supplement, well yes I do..and Business and Finance and numerous others sent to me by my Financial Advisors!

And yes..I do go off to my villa in Spain and didn't manage to acquire any of my properties through dull, repetitive thinking.

In the immortal words of Billy Connolly "Don't pity me....I'm f****** loaded!!!! If I'd listened to the likes of you God knows where I'd be!! As for 'dogma' why not try reading back through your own posts!!!

Hi, thanks for the contribution. Can I just ask you a question - how many of these people queueing up to buy houses for 400k in the back of Balivor do you think will be living in spanish villas in 10 years' time? There's no doubt that anyone who rode the property wave from the mid 90s has made a killing and done very well, but we're living in 2006 now, and I think pretty much everyone in here agrees that you'd be a fool to sign up to a 40 year mortgage and put all your savings into stamp duty for a crappy location property with no services.

If we were to see a thread like this back in 1995 and 'listened to the likes of' us, you'd be right. (Again the mantra, "sure if I listened to you lot, I'd still be renting"). But do you really believe that all these 20 something people living in Co. Meath will be sipping cocktails from their villas? The market has changed massively in 10 years.

 

[phoenix_n]

In my opinion, this very fact (coupled with an emergence of fear) will be the instigating factor in the mass selling of so-called 'investment' properties.

You are correct with the emergence of fear. (men are motivated by either interest or fear) . But there will not be mass selling of 'investment properties'.

Why ? Because there will be no-one prepared to buy them.

 

[whizzbang]

You are correct with the emergence of fear. (men are motivated by either interest or fear) . But there will not be mass selling of 'investment properties'.

Why ? Because there will be no-one prepared to buy them.

Exactly, we are not going to see a "Black Monday" where all of a sudden all houses are half price. We will see months and months of hosues not selling and frustrated EAs trying to talk sellers into lowering prices so they can move the houses off their books.

 

[room305]

You are correct with the emergence of fear. (men are motivated by either interest or fear) . But there will not be mass selling of 'investment properties'.

Why ? Because there will be no-one prepared to buy them.

Hit the nail on the head there. I think it is possible that houses won't even drop much in nominal terms. The correction will happen in real terms played out over a decade or so.

The worry for FTBs should not be that they will end up in a negative equity situation but rather that they will simply be unable to find a buyer for their property. Leaving them stuck for a large portion of their lives in a residence they had only ever viewed as a "starter home".

 

[Calina]

Hmm,

It's interesting when one side of a debate gets defensive, and it looks to me like liteweight, that's what's happening here. The thing is w2dw has very strong views, and at least as the guts to argue them out. I don't agree with everything s/he has to say in general, and I'm not altogether convinced by most of his more recent predictions. It's of secondary important because frankly - whether you like it or not - his analysis is absolutely correct. Your advice to FTBs to buy is based on the sole rationale of "if you don't, you'll get left behind". He could have put it a bit more diplomatically, but frankly, you haven't said anything that no one's heard before.

This presupposes that possession of a mortgage/property is the be all and end all of financial success. Unfortunately, it's not. Like a lot of wealth, it is impossible to quantify that wealth until you cash it in. One of the most naive things I see on this site on a day to day basis, particularly over on location, location, location is the absolute conviction of people that they are somehow richer because the asking price of their house has gone up. Unfortunately, you're not richer unless you cash it in. Maybe you'll cash in all your chips, and that's fine. You'll be rolling in it.

You would do well to remember that in a debate about public sentiment in property, that while it is not just w2dw's sentiment that is under discussion, it is not just yours either. Personally I'm interested to see the contributions of people who don't see trouble ahead - particularly as they seem to be as rare as hell on this site - but I'm consistently disappointed by the level of analysis which they bring which has, in recent months been less than indepth. From what I can see, currently, most of it appears to amount to "you've been saying the same things for five years and you were WRONG" which, of course, is no guarantee that that will continue to be the case.

Ultimately, the value of your investment can go up as well as down. Timing the change, however, is difficult. Realistically speaking, I tire of people discussing how you can't go wrong with property. Property has a very distinct function in providing shelter. Unfortunately, this country doesn't see it as such right now. It's seen as a cash cow get rich scheme.

This has had a bearing on the types of properties being built many of which have not been built with any sort of long term planning in mind.

But it doesn't matter though, does it - because if I am to believe you, properties will continue to rise, based on an analysis of "because they did for the last five years". Or that's how it seems.

 

[CelloPoint]

What makes people so sure there won't a mass selling off of properties? An investor who bought, say in 2002 will happily take a hit of 50k off today's market price if he was fearful of the market outlook.

The other factor that you must consider for a mass selling off is that some people with second properties will have no choice but to sell because they won't be able to get tenants to cover the mortgage repayments (obtained with equity from their own home) when there are loads of places for rent and a dwindling immigrant population.

As always, those properties in badly serviced areas will be hit hardest.

 

[CelloPoint]

Hit the nail on the head there. I think it is possible that houses won't even drop much in nominal terms. The correction will happen in real terms played out over a decade or so.

What makes people so sure there won't a mass selling off of properties? An investor who bought, say in 2002 will happily take a hit of 50k off today's market price if he was fearful of the market outlook.

The other factor that you must consider for a mass selling off is that some people with second properties will have no choice but to sell because they won't be able to get tenants to cover the mortgage repayments (obtained with equity from their own home) when there are loads of places for rent and a dwindling immigrant population.

As always, those properties in badly serviced areas will be hit hardest.

 

[room305]

What makes people so sure there won't a mass selling off of properties?

You can't sell if nobody is buying.

 

[phoenix_n]

Exactly, we are not going to see a "Black Monday" where all of a sudden all houses are half price. We will see months and months of hosues not selling and frustrated EAs trying to talk sellers into lowering prices so they can move the houses off their books.

Prices will fall but with interest replaced by fear there will be no takers. Those that can't service their debt or those who want to cash it on some of the equity gained over the years will drop their prices the most.

But no-one is going to take the risk that what they think could be the bottom of the market is in fact.....only a crevice.

(IMO)