Current public sentiment towards the housing market?

[CelloPoint]

Property is sticky on the way down, as people are very reluctant to come down in price. Regardless of what they paid for the house.

The amatuer investor believes this to be the case. But for the more astute investor, he'll recognise a road to nowhere and bail out regardless. The psychology of selling an asset for less than you bought it does not factor in to the cold, hard truth of the market price. As usual the gullible amatuers will be the ones who hold on, only to be left with an even worse situation.

 

[Guest107]

I wonder what the general response on an RTE equivalent would be?

that the ladder has become slippy and icky and is breaking their fingernails as they climb and YEW K

 

[liteweight]

- 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' timI

I have no idea, it really depends on what they do in the interim.

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,

I started riding the wave in 2001 and have indeed made a 'killing' even though its only 2006. Really depends on what you did with the wealth![/quote]

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.

It depends on what you want. I agree about the crappy location with no services but I don't imagine anyone sets out to buy something like that. FTB don't pay stamp duty on new homes below 1250sq. ft. or on secondhand homes up to a price of approx 317k. As for tying themselves into the mortgage it depends on what you want. Not everyone sees a home as an investment, even though its probably the biggest investment they'll ever make! I think it is exactly the type of dinner conversations where house prices are discussed which is changing the perception of what your first HOME should be. Nowadays, people seem to want it to be 'all things to all men' e.g. good location, spacious, rising in value every month. My first house was a 20 minute drive from Dublin (in traffic) and everybody thought it was the back of beyonds at the time. Nothings changed except the distance. However, distance does count as it interferes with quality of everyday life.

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.

I may not believe they'll be sipping cocktails in their villas but I'd bet a good many of them will be living closer to where they want to be. In general, i believe that corrections in the market will affect the outlying satellite towns long before it affects the cities. If you imagine that most people who made a killing only did so in the 90s you'd be wrong. IMO those who bought as late as 2004 are still making a good profit and prices would have to drop a long way before they made a loss.

 

[room305]

The amatuer investor believes this to be the case. But for the more astute investor, he'll recognise a road to nowhere and bail out regardless.

In 2006 which is a bigger proportion of the BTL market place - astute investors or amateur gamblers?

The people panicking will be flippers and developers who have just had buyers walk out on off-plan deposits. Both of those will can come down significantly but will still struggle to attract buyers.

I'm inclined to think that most landlord's (say who became landlord's pre-2001) will hang-on, either because they view as a long-term investment/pension or because they don't want to come down in price.

Anyway, it doesn't matter how much they come down in price they will still struggle to sell.

 

[walk2dewater]

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.

Sounds like you were lucky, right time, right place. Unlike the current crop of FTBs who are subsidising the early retirement lifestyles of their elders via the property pyramid.

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!!!

Prattling out tired old substitute-for-thinking-cliches is dogma, no matter what pulpit it comes from, no matter how many times its repeated by you, the real estate economist or anyone else.

 

[Guest126]

Yea I am loaded too (says he pretending to live in a 5 bed detached luxury house in Cork city, and owning 3 villas...one in Spain, one in France and one in, oh let me see, how about Florida) - Ah the beauty of the internet now you all believe me I am sure!!

 

[Duplex]

Its worth remembering that this rate tightening cycle is a global phenomenon. The worlds central banks are taking away the punch bowl just as the party gets into full swing, hardly unprecedented however.
So whatever happens to sentiment in the Irish housing market it will happen against the backdrop of a slowing/contracting global economy.

 

[whathome]

there is very little risk for the developers and they can turn off the tap

In Jean-Claude Trichet speak: "Withdrawal of accommodation accommodation"

What will happen to the armies of construction workers that are currently employed building vacant property when the tap gets turned off?

 

[sonar]

Its worth remembering that this rate tightening cycle is a global phenomenon. The worlds central banks are taking away the punch bowl just as the party gets into full swing, hardly unprecedented however.
So whatever happens to sentiment in the Irish housing market it will happen against the backdrop of a slowing/contracting global economy.

Today alone we've had interest rate hikes from

The Danish National Bank
Bank of Slovenia
South African Reserve Bank
Bank Of England
and last but by no means least the ECB.

 

[bogwarrior]

Today alone we've had interest rate hikes from

The Danish National Bank
Bank of Slovenia
South African Reserve Bank
Bank Of England
and last but by no means least the ECB.

...and yesterday from the Reserve Bank of Australia.

 

[walk2dewater]

But will they lose their nerve when all this hiking threatens recession? THAT is the real question... stagflation may be the muddle through scenario that appeals the most... rates set just perfectly so as to stem inflation, but not cause a whooping recession... can it be pulled off?

Either way asset bubbles everywhere (consumer, tech stocks and property) are going to get pole-axed from both sides...

 

[Duplex]

But will they lose their nerve when all this hiking threatens recession? THAT is the real question... stagflation may be the muddle through scenario that appeals the most... rates set just perfectly so as to stem inflation, but not cause a whooping recession... can it be pulled off?

Either way asset bubbles everywhere (consumer, tech stocks and property) are going to get pole-axed from both sides...

Rates fall in recessions I guess. But the bubble economies (Ireland, Spain, UK, US, Australia) problems are structural and the bad money needs to be flushed from the system.

 

[gidxl03]

Too many bears on this thread for a fair balanced argument!

Some more bullish thoughts on why the sky is unlikely to fall down just yet;
[1] Investors who want to realise their profit are interested in their nett return. If when they buy high, even if the price drops in the mean time, it will eventually recover. Therefore, by buying high, they are ensuring that they pay less Capital Gains Tax when they do eventually sell. The current CGT rate is 20%. It may return to 40% when times get hard. The CGT factor should not be dismissed lightly.

[2] Where to invest the money after selling? With peak oil arriving any time soon, the general stock market may be hit hard as economies stop expanding and start to shrink instead. Gold may will be a good bet, but how many people will be willing to buy 100K's of it?

[3] See the plateau (soft landing) of house prices in the UK during the last 12 months. http://www.housepricecrash.co.uk It can happen!

 

[whathome]

Too many bears on this thread for a fair balanced argument!

Some more bullish thoughts on why the sky is unlikely to fall down just yet;
[1] Investors who want to realise their profit are interested in their nett return. If when they buy high, even if the price drops in the mean time, it will eventually recover. Therefore, by buying high, they are ensuring that they pay less Capital Gains Tax when they do eventually sell. The current CGT rate is 20%. It may return to 40% when times get hard. The CGT factor should not be dismissed lightly.

[2] Where to invest the money after selling? With peak oil arriving any time soon, the general stock market may be hit hard as economies stop expanding and start to shrink instead. Gold may will be a good bet, but how many people will be willing to buy 100K's of it?

[3] See the plateau (soft landing) of house prices in the UK during the last 12 months. http://www.housepricecrash.co.uk It can happen!

I think this answers the question "what is smart money doing?" ...
It's NOT buying Irish property!

 

[bearishbull]

[3] See the plateau (soft landing) of house prices in the UK during the last 12 months. http://www.housepricecrash.co.uk It can happen!

After todays rate rise in uk and another by xmas i think prices may well be heading lower in next year or two. once theres a few quarters of price falls a negative cycle of bearish sentiment gets established and is very difficult to counter.

 

[gidxl03]

So 'whathome', say I have 600K to invest after selling property bought in 1996. What do you suggest I do with this cash to protect it from inflation?

WHAT IF for example the US solves its debt problem by creating trillions of FIAT dollars (thereby devaluing China's foreign exchange of 1 trillion USD)and our friends at the ECB want to keep the euro pegged with the dollar. ECB will need to reduce interest rates and so property will continue to rise sharply while my 600K in a Bond is worth less and less every day (and the government tax it!).

 

[whathome]

Therefore, by buying high, they are ensuring that they pay less Capital Gains Tax when they do eventually sell.

From the Fr Doughal school of economics.

Ted: "Why are you setting fire to all your savings from the bank Doughal?"
Doughal: "Ah Ted - I didn't want to pay tax on the interest"

 

[whathome]

So 'whathome', say I have 600K to invest after selling property bought in 1996. What do you suggest I do with this cash to protect it from inflation?

WHAT IF for example the US solves its debt problem by creating trillions of FIAT dollars (thereby devaluing China's foreign exchange of 1 trillion USD)and our friends at the ECB want to keep the euro pegged with the dollar. ECB will need to reduce interest rates and so property will continue to rise sharply while my 600K in a Bond is worth less and less every day (and the government tax it!).

That is an excellent question...I certainly wouldn't try to protect it by investing in Irish property.

 

[gidxl03]

'bearishbull' your prediction may of course be true. However Q2 2006 shows a fairly sustainable increase of about 4 to 5% and so small IR increases of 0.5% will not be enough to cause a major upset.
- UK pop is ~15 times ours, but they are building only 2x as many houses
- average HP/Salary is about 8
- very high immigration levels

 

[gidxl03]

'whathome', post 1161 is out of context! The context is: an investor who is thinking about selling: forgoing 50K a year of easy money and 12K in rent to instead pay 1% to an auctioneer, an few K to get house painted & decorated, hassle of selling furniture. And, after having timed the market, buy in again and pay stamp duty of about 7%, more solicitors etc.

And after all that you don't have an answer to what to do with the money. Perhaps now you see the other side of the fence !