House Market Weakening?

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Duplex said:
The Irish blaming the ECB for the upcoming frightfulness is a bit rich. The issue of divergent economies in the Euro area was supposed to be addressed by national fiscal policy, e.g. using tax to dampen any speculative asset bubbles. The fact that the government has not acknowledged that a bubble exists in the property market, suggests that they will not take any action. The Koreans, Chinese and Spanish have recently announced drastic policies to dampen speculative demand in their respective markets, the Irish government it seems are happy to allow a market solution to the mania. So our government is either staggeringly apathetic, or stunningly incompetent. I favour the latter; to be fair to them.
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As an avid reader of the free morning dailys, I've noticed a few back and forths in the letter section recently. Basically on one side it's A telling B to stop moaning about property prices and "enjoy" the "current boom" and if ya keep going on so negatively sure ya'll cos a recession bejazus. On the other side, B is telling A how him and the missus need to work 25hrs a day to save up a deposit, but by the time they've got the deposit the price has gone up etc etc...

Mr A clearly has the upperhand... which leads me to think that bertie and co. are just living in Realpolitik...
 
walk2dewater said:
But all this is possible only if the perceived blame is on Irish govt. and not big bad Trichet and his henchmen in Frankfurt.

On other hand, the very credibility of a one-size fits all interest rate and the € itself would be threatened if the perception is that it was the ECB/EU that messed up to Ireland Inc.
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My betting is that only in Ireland would it be believed that the ECB/EU were at fault.
 
Duplex said:
So our government is either staggeringly apathetic, or stunningly incompetent.
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I would say a combination of both. What our government says about spiralling house prices is staggering, attempting to attribute it to a strong economy, ignoring the fact that quite rapidly it is becoming our economy.

On past behaviour I'm inclined to believe the whole mess will be blamed on the ECB. It is pretty common for weak governments to wait until their hand is forced before taking any action and to then blame everything on the bureaucrats in Brussels.
 
If the Irish government is to blame for the Irish house price boom of the past decade, how then are the parallel booms in the US, UK, Spain and several other countries explained?
 
whizzbang said:
"How dare you let me get into debt!"

;)
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Are you telling me there won't be hoards of people ringing Joe Duffy voicing exactly this complaint?

"Nobody told me the prices could go down Joe. Nobody. What I want to know, is why, if the banks and the gubbermint knew that the prices could go down, they didn't tell ordinary working people like myself ..."

Repeat ad nauseum.
 
ubiquitous said:
If the Irish government is to blame for the Irish house price boom of the past decade, how then are the parallel booms in the US, UK, Spain and several other countries explained?
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Same as here. Cheap credit and excess liquidity in the system.

I'm not blaming the government for causing the speculative boom, I just thought it should be a cause for alarm not celebration.

I do however blame them for pouring petrol on the fire rather than attempting to douse it by pleading with people for some kind of sanity.
 
room305 said:
Are you telling me there won't be hoards of people ringing Joe Duffy voicing exactly this complaint?
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I'm saying this is exactly what they'll say! maybe a little more subtly.

"The goverment should have stopped the banks loaning so much"
"The bank didn't tell me the rates could go up to x%"
"The bank said interest only was the perfect option for someone like me"

etc...

We are not a great people for accepting our personal responsibility for our own well being, just look at the compo culture.
 
whizzbang said:
I'm saying this is exactly what they'll say! maybe a little more subtly.

"The goverment should have stopped the banks loaning so much"
"The bank didn't tell me the rates could go up to x%"
"The bank said interest only was the perfect option for someone like me"

etc...

We are not a great people for accepting our personal responsibility for our own well being, just look at the compo culture.
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Our own Brendan also advocates interest only mortgages in certain circumstances, so proportioning blame in a downturn would be a pretty nasty game.

http://www.askaboutmoney.com/showthread.php?t=28492
 
Re all this talk about how the government failed us, is anyone else worried by what they might do in the next budget? Given it'll have to be a give-away of massive proportions if they're to have a chance of retaining power, and given that house prices seem to be dominating everything at present, I think they'll try something. I imagine it'll be stamp duty related, probably an ease in limits for ftb's/possibly owner occupiers too - either way, imo it would be disastrous for them to start trying to manipulate the market at this late stage.
 
I agree completely Glenbhoy. I am absolutely petrified about what they will try to do. I imagine a further extension of the thresholds possibly even something as dramatic as scrapping of stamp duty for PPRs.

Either way, as you say, anything they do at this late stage could be disastrous. Through sheer luck I purchased my house just before the stamp duty thresholds moved two years ago but prices on the same street jumped almost immediately after.
 
room305 said:
I agree completely Glenbhoy. I am absolutely petrified about what they will try to do. I imagine a further extension of the thresholds possibly even something as dramatic as scrapping of stamp duty for PPRs.
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Removing the bands would probably have less of an impact than moving them upwards, I think. They're seen as targets for a lot of people. With the bands gone, there's a chance people will look at the reality of what they can afford.

That being said I believe they should move them down, and well down at that. But that medicine could be a bit on the bitter side.
 
I wonder what the Fianna Fail backbench committee just formed have up their sleave. They are obviously feeling alot of heat on the door steps. I wonder will the 2007 election be seen in the future as being like the 1977 election. Bertie Ahern has many similarities to Jack Lynch in that he is reluctant to take tough decisions and likes being popular.
 
Contrary to popular opinion the government here does not promote property investment here as much as many other countries do, such as allowing depreciating the property cost as they do in the US or australia, or zero capital gains tax like New Zealand, or much lower rates of stamp duty as in England.
 
Contrary to popular opinion the government here does not promote property investment here as much as many other countries do, such as allowing depreciating the property cost as they do in the US or australia, or zero capital gains tax like New Zealand, or much lower rates of stamp duty as in England.
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Has someone forgotten about our tax incentive schemes?
CGT is at top rate of income tax in the UK as opposed to 20%.
As for the depreciating assets - over what time scale - probably 2% p.a? Hardly a factor given that people's investment time scale here is measured in months.
Can't comment much on the other countries mentioned save to point out they are all anglo-saxon with a history of property bubbles (or in NZ, about to have).
 
Glenbhoy said:
Has someone forgotten about our tax incentive schemes?
CGT is at top rate of income tax in the UK as opposed to 20%.
As for the depreciating assets - over what time scale - probably 2% p.a?
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quite, we tax entry into the market (stamp duty and vat and stuff ) and the UK taxes the exit (CGT)
 
badabing said:
Contrary to popular opinion the government here does not promote property investment here as much as many other countries do, such as allowing depreciating the property cost as they do in the US or australia, or zero capital gains tax like New Zealand, or much lower rates of stamp duty as in England.
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Well actually, the government here actively promotes property investment. I don't know of any other country where the leader of the country urges people to buy into an overheated market and rubbishes warnings from economists and groups like the OECD.

Everybody said we're going to see a huge downturn in 2005 linking into 2006 - they were entirely wrong. Really we should have an examination into why so many people got it so wrong. My view is there's not a great problem. Really, the bad advice of last year given by so many has maybe made some people make mistakes, that they should have bought last year.
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-- Bertie Ahern, speaking after the IMI conference this year.
 
room305 said:
Well actually, the government here actively promotes property investment.
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In fairness, I think you're taking that out of context slightly. Bertie was not promoting property investment per se. I think it's symptomatic of the great property mania here that even we, the property bears, forget that people sometimes actually buy houses to live in themselves....

Anyway, the only part of that quote which I'd have a problem with is "My view is there's not a great problem". Other than that, he's actually 100% correct. People did predict a crash, it never materialised, and some people who didn't buy at the time are now facing much higher prices.

But he should have acknowledged that there could very well be a big problem and that the govt are keeping an eye on it. Instead, he stuck his head in the sand.
 
conor_mc said:
Other than that, he's actually 100% correct. People did predict a crash, it never materialised, and some people who didn't buy at the time are now facing much higher prices.
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Timing the market works both ways. However, judging by how rapidly prices have risen in the past year I very much doubt there was a significant number of people who needed to buy a house and could comfortably afford to do so but held off because some economists warned of an imminent crash. He only says this to discredit economists in the public mind and set in stone the idea that "Ireland is different".

In the aftermath of a crash will we hear a speech about how wrong the real estate agents were? How people who listened to them a year previously and believed their hype about never-ending capital appreciation far in excess of wage growth lost out massively by purchasing? Perhaps advising those still thinking of purchasing that the market may have further to fall?
 
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