House Market Weakening?

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I don't really think a reference point is needed at all. Irish people have an obsession with home ownership that isn't evident in a lot of other European countries. In fact most of the international studies which have suggested that Ireland is in line for a crash seem to have an obsession with comparing us to other countries which I don't think is helpful. I merely had suggested that Dublin isn't as expensive as people make out in terms of affordability and i stand by that. Despite the constant reports in the media that FTB are priced out of the market, they still make up a very significant percentange of home purchasers. But London has a far better stock of period housing than Dublin and I'm not sure comparing like for like is useful in that regard anyway. I have yet to see any credible arguments in this thread which would suggest any good reasons for a crash given the state of the economy at the moment. Thats not to say that a crash won't occur but I think that in order to predict a crash, you would need to predict a serious downturn in the economy or some sort of major increase on the supply side or major decrease on the demand side. As long as interest rates don't rise too much I don't think that a crash is likely. In fact I think it is extremely unlikely.

As for first time buyers not buying property for the next six months - this seems like a ridiculous idea that practically could never work and once again I fail to understand why people would want to interfere with the market in this way. It is likely that prices will begin to level off anyway as interest rates rise. A lot of investors in particular will be put off at the idea of higher interest rates especially when they can't even cover their mortgages with rental income. But I still think this time next year and the year after etc. we will still be hearing predictions of the 'bubble bursting' without it ever materialising. I know people that didn't buy in around 2001/2002 because they believed the arguments that the bubble was going to burst and now they have ended up buying far inferior properties than what they could have afforded back then. Anyway I'm still buying now and not waiting around for a crash that IMO ain't gonna happen.
 
southsideboy said:
I have yet to see any credible arguments in this thread which would suggest any good reasons for a crash given the state of the economy at the moment.
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Here's a few:

- Interest rates will continue to rise here, probably to bring us into line with the US (5.25% base rate at the end of this month)
- Any slowdown of US economy will have a huge effect on the world economy
- Possible banking collapse in China
- Bank of Japan raising overnight interest rates

You seem to base most of your argument on the soundness of the Irish economy. Yet our exports are decreasing and our imports are increasing and the economy is increasingly being driven by the unsustainable bubble that is the Irish housing market.
 
More news.

Yesterdays sunday trib carried reports that the criteria for interest only mortgages....the ones where you never pay anything off for 35 years :D ...... have been further relaxed in recent times.

So the financial sector , having used up all the repayment over 20 years customers and the repayment over 35 year customers, find that all thats left to lend to is the interest only for 35 years type of person.

They will have been used up....by october I'd say. Expect the interest only 40 year product to appear for christmas .
 
Indo reporting this morning the the most recent census may have uncovered as many as 245,000 dwellings considered unoccupied...
 
southsideboy said:
I have yet to see any credible arguments in this thread which would suggest any good reasons for a crash given the state of the economy at the moment.
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104,000 empty investment properties. Interest rates have increased by 37.5% in six months, that will be 62.5% in a year come December 2006.
 
2Pack said:
More news.

Yesterdays sunday trib carried reports that the criteria for interest only mortgages....the ones where you never pay anything off for 35 years :D ...... have been further relaxed in recent times.

So the financial sector , having used up all the repayment over 20 years customers and the repayment over 35 year customers, find that all thats left to lend to is the interest only for 35 years type of person.

They will have been used up....by october I'd say. Expect the interest only 40 year product to appear for christmas .
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I read yesterday that the Banks are now relaxing their criteria when it comes to lending to migrants. Ireland is a couple of years behind the US in the lax lending policy stakes. So if you want a crystal ball type view of what lies in store read about Mocking Bird Lane in Denver, Colorado.


http://www.denverpost.com/news/ci_3950960


I can’t see the government doing anything about this trend towards increasingly lax lending, any action now would cause the market to stall and crash. So it’s to be the ‘Tokyo Resolution’ an insane speculative bubble collapsing under its own weight, followed by much hand wringing and gnashing of teeth.
 
I've suspected that the only outcome is the "going Japanese" scenario... a massive spike in prices... multi-million euro ex-council houses etc. This is truly grim. In 2006 the belief that we can get ever richer by building and trading houses to each other is now firmly embedded in the irish psyche. Are we intent on a property supernova? If so, so be it. The upside for people like me (professionals on contract renting their home) is a few more years of ever higher contract salaries and negotiating lower rents before my forced departure.

[Disclosure before Im labelled a begrudger etc: I do own property, not in Ireland, and I could comfortably "afford" a jumbo irish mortgage.]
 
Remix said:
Indo reporting this morning the the most recent census may have uncovered as many as 245,000 dwellings considered unoccupied...
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It's actually worse than that Remix, you subtracted the wrong number!

The article says 275,000 were actually identified as being vacant. Another 30,000 (so 305k in total) were just assumed to be vacant because when the census takers "called on various occasions" - no one was home. It's likely alot of those 30,000 were holiday homes, unfit for habitation or just people were actually on holidays for a month etc.

But that still leaves the 275,000 - that is *shocking*.
 
soma said:
It's actually worse than that Remix, you subtracted the wrong number!

The article says 275,000 were actually identified as being vacant. Another 30,000 (so 305k in total) were just assumed to be vacant because when the census takers "called on various occasions" - no one was home. It's likely alot of those 30,000 were holiday homes, unfit for habitation or just people were actually on holidays for a month etc.

But that still leaves the 275,000 - that is *shocking*.
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And yet we are going to churn out another 90k units this year, we better hope Turkey gain entry into the EU as we wouldn't want these investors not being able to rent them out.........:rolleyes:
 
From the Denver Post article:

"Her variable interest rate started at 10.4 percent and could have surpassed 16 percent. "

Why are these rates so high in what I would have thought is an ultra-competitive home-loan market in the States?
 
polaris said:
From the Denver Post article:

"Her variable interest rate started at 10.4 percent and could have surpassed 16 percent. "

Why are these rates so high in what I would have thought is an ultra-competitive home-loan market in the States?
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I havent read the article you're referring to, but I'm guessing this individual borrowed from a 'sub-prime' lender. They've been making head-way in Ireland too AFAIK.
 
Our sub primes such as start or ge do not charge what some of the american ones charge .

The worst spread here is about 6% over base , ie 8.75% when the base rate is 2.75% . Watch to see if that spread increases though ! Very very few mortgage holders in Ireland are paying more than 3% over base , even the dodgyish ones.

Yer wan in Denver was paying 16% in 2004 when the US base rate was about 2% (but rising) . That kind of spread is usury surely . :(
 
its pointless buying with such high rates when your on a low income/sub prime status,i actually saw a documentary where these sub prime lenders prey on vunerable financially illiterate poor people(particularly african american) to make massive margins and they know they can foreclose and seize the property if the borrower cant repay,then they take what they can get at auction even if it isnt true market value once they get the amount owed on mortgage.
 
whizzbang said:
the article in question
http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1636317&issue_id=14226
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:eek: :eek: whats that then ????? 15% or so .

In the UK its a smidge over 3% . The worst areas in England are not even 5% although I Think Wales is over 5% . See the halifax survey here .

[broken link removed]

The definition of Long Term Empty is over 6 months and where council tax discount is claimed (which it isn't always) so the empties could be and probably are higher in some cases but not by that much , certainly not double. Percentage figures below linked to sources .

Empty Homes by region (April 2004 England and 2001 Scotland)​

England 689,675 = [broken link removed]

Scotland 60,000 = [broken link removed]

In ALL OF LONDON Only 36,000 homes are empty long term and only some [broken link removed] or [broken link removed] (March 2006 see fig 2 )

This is an enormous overhang. When the last bust happened in England in the early 1990s the empty rate was around 5% , more in London.

:eek: YOIKES!!!!!! :eek:
 
2Pack said:
This is an enormous overhang. When the last bust happened in England in the early 1990s the empty rate was around 7% IIRC

:eek: YOIKES!!!!!! :eek:
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Let the propertyvalanche begin! (its a word...really it is. ) ;)
 
The disturbing possibility exists that there isn’t a rental market for many of these empty homes. It’s hard to believe that the owners of these properties would forego rental income if it were out there. The vacancy rate has been falling in the UK over the past few years; I believe that the vacancy rate has risen in the US to about 9%, the highest in decades.

The Irish figures for empty homes and the continuing boom in the face of rising interest rates, seems to heave the market doctrine of supply and demand out the window. Further evidence that Ireland is experiencing something quite unique, mania.
 
is it likely to be the case that people are making losses on unrented properties(using interest only mortgages )which they can offset against profits elsewhere? anyone know how many properties per thousand population we have now then? would love to see one of the newspapers/media outlets do an investigation into exact levels of unoccupancy etc but they seem reluctant to do bad news stories on property market which they make so much money from through advertising etc.
 
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