House Market Weakening?

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A few points about the property market:

*Those prices that you see in real estate agent windows are suggestions, from someone who is familiar with the current market, for what sellers and buyers are likely to agree on in the immediate future

*The price of your property is based on the price that occurred in the last several transactions (but mostly the very last) for a property v similar to yours

*Real estate agents will suggest to the seller a reduction in the price if there's no buyers, increase the price if there's a steady stream of buyers. They make a living shifting property, not advertising it

* Real estate agents in fact go t1ts up if they don't sell any real estate

*In the UK for e.g. <10% of property is traded per annum, it is these transactions that set the market price for the other 90%

A bit of a think of about these points together with the latest news from Trichet et al, recent census info on the scale of vacant "investment" property in Ireland, the microscopic yields on residential property in general, the level of debt in ireland, and the behaviour of BoI/AIB in relation to their commercial property portfolio, combining all this with a tiny dash of skeptisim in relation to whats passed as honest-to-goodness-we-have-nothing-to-ramp-up-or-spin reporting in the Irish meeja, and VOILA!! there we have it ........yes, the Great Irish Property Sale coming eventually if not sooner or later....
 
madisona said:
Now for the curious part. If you go to the Examiners online site there is no sign of this article.
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I think you're reading too much into it.... the Examiner's website is crap!
 
Looks like the Europeans are attempting to get the government to get our house, I doubt it will be listened to............:eek:

[broken link removed]
 
[QUOTE]"There is a need to issue prudential warnings and messages that, combined with decisions taken at EU level, are incorporated into the economic cycles of EU member states," he said in response to a question from Fianna Fáil MEP Eoin Ryan. "The Irish authorities are aware of their capacity and influence in this respect and we are counting on them."[/QUOTE]

Can anyone imagine Bertie issuing prudential warnings, given his hissy fit yesterday when pressed on the dangers to the country of the property bubble?
 
Duplex said:
Can anyone imagine Bertie issuing prudential warnings, given his hissy fit yesterday when pressed on the dangers to the country of the property bubble?
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What what his hissy fit? Didn't hear about that one
 
whizzbang said:
Here is a good article on how housing bubbles pop.
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So housing bubbles don't really go pop but instead the air slowly, but irreversibly, leaks out of them over a 10 year time period?
 
polaris said:
So housing bubbles don't really go pop but instead the air slowly, but irreversibly, leaks out of them over a 10 year time period?
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This makes sense to me. I can especially visualise the first two years where people pump money into home improvements in order to try and aid the sale, or hold their property hoping that it is merely a short term correction before the resumption of rising prices. During this period I would expect many bullish articles promoting "bargains" for FTBs and much insistence from the real estate and construction sectors (indeed possibly the government) that in no way was a housing crash underway.

How do other see it playing out - stampede or slow decline in prices?
 
room305 said:
How do other see it playing out - stampede or slow decline in prices?
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Difficult to say IMO, I can see both sides of the argument, it all depends on how quickly the ECB increase their rates, the affordability calculations which have been given in the SBP recently are very striking and could focus minds in a way which hasn't happened over the past few years. I think that there could be an increase in the number of investment properties coming on stream as investors will be unable to sit with empty units/under performing lettings when price rises peter out coupled with rising rates
 
room305 said:
How do other see it playing out - stampede or slow decline in prices?
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I think that it could happen quite quickly in the Irish market. Variable rate mortgages make us a lot more susceptible to changes in interest rates and less able to weather rises as they can in the States. We also have a huge dependancy on the property market to keep people employed in various areas of the economy (construction, estate agents, banks, solicitors, advertising agencies, etc). This over-dependancy means that a slowdown in house building or selling would probably bite hard within the first year or two.
 
room305 said:
This makes sense to me. I can especially visualise the first two years where people pump money into home improvements in order to try and aid the sale, or hold their property hoping that it is merely a short term correction before the resumption of rising prices. During this period I would expect many bullish articles promoting "bargains" for FTBs and much insistence from the real estate and construction sectors (indeed possibly the government) that in no way was a housing crash underway.

How do other see it playing out - stampede or slow decline in prices?
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It depends on what you define a "stampede" or "slow" to be. Agreed that property market is illiquid and prices are much more sticky than say copper futures. The most recent and nearest property price crash was UK circa 1991-1995. It didn't become fashionable to buy property again until about 1997-98 (someone correct my dates here?) Personally I reckon a few nasty years, followed by a longer slow, bottoming out process. This boom is absolutely enormous and the psychology so overwhelmingly bullish vis a vis previous booms, so who knows? Mild or severe that the price crash will be, I cant see how an outright recession can be avoided in Ireland
 
How about Brian Cowans Hissy Fit Yesterday . Reported in The Times

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In response, Minister for Finance Brian Cowen said the Government would have to be careful in implementing any measures aimed at calming the housing market.
"The gradual phasing out of the tax-relief scheme is designed to avoid any sudden shock to the construction sector generally, having regard to the important contribution of this sector to Irish economic growth at present," Mr Cowen said.
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In biffo speak that would be

"feck off , we won't touch it because it will blow itself up and if we leave it alone it will blow itselt up anyway and then we won't lose the next election for deliberately blowing it up and we won't lose our party funding because the builders blame us and you surely don't expect ME OF ALL PEOPLE to back that ECB up what with the Galway Races coming up in a month ....now do ya ??? "
 
2Pack said:
How about Brian Cowans Hissy Fit Yesterday . Reported in The Times

[broken link removed]



In biffo speak that would be



"feck off , we won't touch it because it will blow itself up and if we leave it alone it will blow itselft up anyway and then we won't lose the next election for deliberately blowing it up and we won't lose our party funding because the builders blame us and you surely don't expect MED to back that ECB up what with the Galway Races coming up in a month do ya ??? "
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Thanks for the translation:)
 
This COULD be aided with a new tax on investment properties in the next budget.

Bertie has said (today, I think), that the governments' response to house prices will come from the supply side. This will only benefit his cosey developer friends. Instead, they (Gov) should release that supply is not causing price rises, it is the demand side. Many people are buying houses in the expectation of futhur prices rises. People are buying younger and younger and in areas that they do not wish to settle in. They simply see it as their little property SSIA, which will come in handy when they need a desposit for a house that they want.

Simply put, (it is the concurring theme in this thread), IMO, around 50% of the potential purchasers (including 'canny' and 'savvy' investors) would not buy if they knew the market had peaked and prices 'can only fall'.

There could also be a foreign property crash in a couple of years when the 3/5 Guarenteed Rental Schemes expire. It is common knowledge that the Irish pay over the odd's when buying foreign property. All these foreign property investors, will want to cash in their chips at the same time as they will find management companys charge too much to get tennants or they can't seem to find anyone willing to pay rent to an over priced property.
 
redo said:
Bertie has said (today, I think), that the governments' response to house prices will come from the supply side.
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This is certainly disappointing to hear. His brother Noel made similar comments before. I would like a reporter to ask them to explain why they are incentivising the supply-side when clearly there is no shortage of supply. There is in fact a massive overhang of about 15% of housing stock which is positively scary.

Far from preventing a crash or encouraging the much vaunted "soft landing", encouraging an ever greater supply of properties onto the market at this stage vastly increases the severity of a crash because the discrepancy between the volume of houses needed and the number of houses built grows ever wider.

I'm with walk2dewater on this one, I'm actively preparing for a recession.
 
I’m convinced that the bubble will burst of it’s own accord. Government intervention now would only precipitate the inevitable. Its worth remembering, that even the concept of an asset price bubble is unknown to 80% of the population an anathema to another 15%. Given the importance of house building to the economy and the national finances it may be naive to expect Bertie to take action, especially as the time for action is long past.
 
[QUOTE]"There is a need to issue prudential warnings and messages that, combined with decisions taken at EU level, are incorporated into the economic cycles of EU member states," he said in response to a question from Fianna Fáil MEP Eoin Ryan. "The Irish authorities are aware of their capacity and influence in this respect and we are counting on them."[/quote]


- Does anyone know what question Eoin Ryan asked?
 
Next up is the Management Company Furoré 2006 -2008 .

Over 40% of all apartments in Dublin have a dysfunctional management company many of which are useless at collecting money and are recklessly trading. Half of these, 20% of all apartments, are grossly dysfunctional.

These 20-40% of Dublin apartments will become unsellable or completely unsellable as the liabilities behind them are unquantifiable in some cases .

These properties will tank big time unlike developments with

1. Functioning Management Companies
2. Audited Accounts
3. Sink Funds
4. Good collection practises , not allowing arrears build up.

If you own one of the 40% then I would get out while you can or make it functional .

Houses are usually freehold so its not an issue there .

Noel Ahern, Minister for housing, has this report quantifying the figure as 40% of all Co. Dublin apartments but heck he won't release it will he :D
 
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