Future price of Irish properties

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another warning on house prices today http://www.rte.ie/business/2006/0127/centralbank.html

im not buying for next few years,the market is showing classic bubble behaviour as alluded to by yale professor shiller who predicted dot.com bust. http://money.cnn.com/2005/01/13/real...shiller1_0502/

prices fell in many parts of england in last 4 months



[broken link removed] page 5 to see house price falls for last 3 moths of 2005
.


more warnings on uk market.
http://www.thisismoney.co.uk/mortgag...&in_page_id=57


anyone who doesnt think irish property is wildely overvalued is living in a bubble!!! if you can afford to wait for a few years then do so,house prices are falling in many parts of usa uk france,rental yields are ridiculously low but prices still go up this =highly speculative behaviour=high risk bubble.
the irish obsession with property ownership is irrational and will be the downfall of this economy.
prices may rise for the next few years but in the medium to long term a correction in prices is ineviatable,wages arent rising fast enough to sustain such increase indefinetely,interest rates heading up,american economy starting to slowdown,intel chief executive on radio today says we are becoming inefficient even with our low low taxes-the multinationals will be off to eastern europe and asia when the tax advantages dont outweigh the high labour and business costs... there may be trouble ahead!!!!!!!!!!!

www.housepricecrash.co.uk
 
This is what is happening in the UK with FTB's is there any FTB's anymore in Ireland?
 
FTB putting down the deposit on it tomorrow, God help me!! sure i'm paying too much but isn't everything overvalued anyway? 3 bed ex council house in Dublin close to town in an "up and coming area"
if the bubble bursts we're all %$%$%$!!!!!
 
chihiro said:
if the bubble bursts we're all %$%$%$!!!!!
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How would a bursting bubble affect you? You'll still be living in the same house and you'll still be making the same mortgage repayments - right?
 
worried about resale and negative equity. will be getting a 97% mortgage. i know the days for making big returns are probably gone (if only i'd bought sooner!). chances are we could sell up in a few years and move to cork but would feel stuck in dublin if house had lost value. It's all very daunting. Been househunting for a year. Got offer accepted Friday. Good house/not so good area. paid a bit more than we would have expected for this area cos house is in such good nick, wouldn't change a thing. (well just the windows!)
i'm just getting nervous!
 
A reduction in house price values will only affect people who bought second homes as investment. If you are a FTB it would be great! and if you own a home and plan to trade up then its still no big deal. example: buy a house for €250,000 but plan to trade up for a house worth €500,000 then say property values drop 20%, you have to sell for €200,000 but buy for €400,000. So you would actually save €50,000! and for people who already own a house and want to stay in it...Does it matter that the value falls? because if you're not going to sell it and you can afford the repayments then so what as long as you're in the house you want.
 
power1A reduction in house price values will only affect people who bought second homes as investment.
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Wishful thinking power1! I suspect it will affect a lot of people just like chihiro who have bought less than ideal homes in less than ideal locations with the expectation of trading up in a couple of years. These people will be stuck with serious negative equity and with the inevitable tightening of credit will be in the same boat for many years to come.
 
Which is why you should only buy if you can afford to. If not, rent and let the landlord take the risk.
 
chihiro said:
worried about resale and negative equity. will be getting a 97% mortgage. i know the days for making big returns are probably gone (if only i'd bought sooner!). chances are we could sell up in a few years and move to cork but would feel stuck in dublin if house had lost value.
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So if there is a bubble, won't the relative price of your desired house in Cork also have fallen proportionally?
 
RainyDay said:
So if there is a bubble, won't the relative price of your desired house in Cork also have fallen proportionally?
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Thats true as long as they have some equity but if they are in negative equity they will have to make good to the bank the negative equity when they sell. As it is unlikely that they will get more than a 100% mortgage on the new house this is additional cash a buyer would have to stump up themselves at the time they go to buy the new house.
 
Interesting to get an American prospective on their bubble, it seems that the American media is less inhibited about discussing the subject than their Irish counterparts. This storey relates to investors in Orlando



Baldwin Park has been ground zero in the real-estate boom -- the Promised Land of six-figure flipping profits.

One example: Last September an investor paid $428,700 for a house in the east Orlando neighborhood, once a Navy base bustling with sailors, not builders. Six weeks later, he flipped it for $625,000.

A house bought for $279,200 last March is on the market for $499,500.

A townhouse bought in October for $337,700 is on the market for $445,000.

A house bought in October for $403,000 is on the market for $670,000. I actually found a comparable house from a builder in a better location for about $60,000 less.

Baldwin investors have developed a sense of entitlement to fast, huge profits. But now those prices have caused a backlog of inventory. There are about 90 listings on the market, and many have sat there for months. You'd never know it because "For Sale" signs aren't allowed.

Realtors say houses used to sell in weeks for full asking price. The unthinkable has happened. Baldwin Park has become a buyer's market.

Consider someone who paid $330,000 for a town house, hoping for a quick flip. The various fees amount to about $5,000 per year. He faces another $3,000 or so in property taxes. Throw in a $300,000 mortgage, and the monthly tab comes to about $2,400.

Some investors use creative loans to keep the number lower at the start. As the mortgage company starts adding more interest and principal, their payments go up.

So do their property taxes if they don't live there. Investors do not get the same protection against annual increases in appraised values as do homeowners. Nor do they get a homestead exemption.

So every month, these investors will be making payments, holding out for prices that are based on a real-estate frenzy that may no longer exist. If the market outlook dims, they do the math on what it costs to hold the asset versus the expected return of doing.
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http://www.orlandosentinel.com/orl-miket2906jan29,0,2502546.column?track=mostemailedlink
 
Duplex said:
Interesting to get an American prospective on their bubble, it seems that the American media is less inhibited about discussing the subject than their Irish counterparts.

Baldwin Park has been ground zero in the real-estate boom -- the Promised Land of six-figure flipping profits.
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..and yet Baldwin Park seems good value compared to Dublin South ! :eek:
 
RainyDay said:
How would a bursting bubble affect you? You'll still be living in the same house and you'll still be making the same mortgage repayments - right?
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Why do I get the sense that most Irish people don't really understand what a severe correction in prices entails? Or how property markets work, the interaction of marginal pricing, sentiment and volumes, or indeed whether they actually understand that property prices can and do fall and currently are falling outside Ireland. Neg equity will be a very real and ugly reality for many; too many finances, marriages, and aspirations will be ruined. Loss of income/employment, govt deficits/layoffs, and social disorder will impact everyone, even those with a large equity buffer (pre-2002 buyers)

The remarkable ability of the Irish construction/estate agent cabal to churn out and sell unit after unit is more than just a critical economic support, its become the psychological bedrock for the feel-good binge we're on. The inevitable outcome aint gonna be a nice, manageable 30% decline peak-to-trough as mentioned by the ESRI recently, we're talking significantly more. Why? well firstly prices have doubled twice since 1997 and we are currently in a mad 'race against rates' frenzy now, leading to I'd guess a 10%+ spike in 2006 alone. Second, escalating fear and panic half-way down the 'slope of hope' means that busts always overshoot, with the last sellers capitulating for buttons at the very bottom. losses of 50%+ is not unimaginable given the state we're in. If all this sound a bit loony, I suggest you hit the history books. The behaviour of market participants in boom and bust cycles is well documented.

At this stage, surely anyone promoting more price increases is the doom monger. I sincerely hope for 2006, 2007 we dont 'go Japanese' in ireland. Remember a 50% decline is equivalent to a 100% increase in the first place, and -50% will only get us back to 2002 prices. The sooner we hit the peak, take our deflationary lumps and start unwinding the excesses of this the better.


WTTW
 
walk2dewater said:
Why do I get the sense that most Irish people don't really understand what a severe correction in prices entails? Or how property markets work, the interaction of marginal pricing, sentiment and volumes, or indeed whether they actually understand that property prices can and do fall and currently are falling outside Ireland. Neg equity will be a very real and ugly reality for many; too many finances, marriages, and aspirations will be ruined. Loss of income/employment, govt deficits/layoffs, and social disorder will impact everyone, even those with a large equity buffer (pre-2002 buyers)

The remarkable ability of the Irish construction/estate agent cabal to churn out and sell unit after unit is more than just a critical economic support, its become the psychological bedrock for the feel-good binge we're on. The inevitable outcome aint gonna be a nice, manageable 30% decline peak-to-trough as mentioned by the ESRI recently, we're talking significantly more. Why? well firstly prices have doubled twice since 1997 and we are currently in a mad 'race against rates' frenzy now, leading to I'd guess a 10%+ spike in 2006 alone. Second, escalating fear and panic half-way down the 'slope of hope' means that busts always overshoot, with the last sellers capitulating for buttons at the very bottom. losses of 50%+ is not unimaginable given the state we're in. If all this sound a bit loony, I suggest you hit the history books. The behaviour of market participants in boom and bust cycles is well documented.

At this stage, surely anyone promoting more price increases is the doom monger. I sincerely hope for 2006, 2007 we dont 'go Japanese' in ireland. Remember a 50% decline is equivalent to a 100% increase in the first place, and -50% will only get us back to 2002 prices. The sooner we hit the peak, take our deflationary lumps and start unwinding the excesses of this the better.


WTTW
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One highly likely outcome you ignore is that prices stagnate for 10/15 years i.e. soft landing. For example, despite the crunch that came with the nasdaq that is pretty much what has been happening in equity markets the last 5 years. A trend that is expected to continue. I agree though that people seem to have no knowledge, or wish to ignore many other housing crashes in countries more advanced than ours. A sort of "it could never happen here" mentality.
 
I propose we come up with a prayer to keep these horrible events at bay. Not a religous prayer - that would be highly inappropriate in the New Ireland.

But something along the lines:

Hail immigrants arriving in plenty
renting is with thee
blessed art thou amongst speculators
and blessed is full employment
in construction
and stay not the hand of moneylenders
for they shall upon us deliver more
of money,money holy money.
 
Chamar said:
One highly likely outcome you ignore is that prices stagnate for 10/15 years i.e. soft landing. For example, despite the crunch that came with the nasdaq that is pretty much what has been happening in equity markets the last 5 years. A trend that is expected to continue. I agree though that people seem to have no knowledge, or wish to ignore many other housing crashes in countries more advanced than ours. A sort of "it could never happen here" mentality.
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By definition, busts follow booms. If you believe they'll be no bust then you believe there's been no boom. And with property values doubling twice in 9 years I'd beg to differ. Proponents of the mythical soft-landing following a genuine speculative boom need to read their history books.

As for the nasdaq having a soft-landing, tell that to someone who bought Nortel for $142 share in March 2000. The same item can be hand for about $2.50 today. Same for Cisco, or Yahoo or, you get the picture.
 
Sorry, my point was excepting Nasdaq & tech stocks. Other stocks and equities i.e. DOW, FTSE indices etc. have been trading sideways (relatively speaking) since the dotcom bubble and are likely/widely forecasted to remain flat for years. Also I don't neccessarily agree that by definition busts have to follow booms. Corrections yes. The question is will this correction come in the form of a short sharp shock or a gradual re-adjustment. In the irish housing market a long period of stagnation can amount to the same thing as 30% drop over a shorter time-frame, but that is not a bust imo - while acknowledging the market had been booming.
 
Glenbhoy said:
Now CoffeeBrew, that's just a ridculous statement.
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Sure just replace the skinny birch tree with a palm tree in this photo and you could be right in elite Baldwin Park, Florida and you wouldn't even know the difference

:D :D

[broken link removed]=
 
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