House Market Weakening?

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So.. 470+ posts later on this topic....and where exactly is this thread going? Keep saying that the bubble will burst & one of these days you will be right. But at what point does one say 'I told you so!' ?

People have been saying this for quite a while now ... but in the meantime where houseprices have increased about 20% over the last 18mths+ or so & if it subsequently collapses & drops back say 10% ...does that still give those to say they knew it all along & that people were warned?

ninsaga
 
ninsaga said:
So.. 470+ posts later on this topic....and where exactly is this thread going? Keep saying that the bubble will burst & one of these days you will be right. But at what point does one say 'I told you so!' ?

People have been saying this for quite a while now ... but in the meantime where houseprices have increased about 20% over the last 18mths+ or so & if it subsequently collapses & drops back say 10% ...does that still give those to say they knew it all along & that people were warned?

ninsaga
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Possibly components of this thread should have split off into separate threads. It would be good to have a separate thread detailing the many top properties sold by banks and commercial companies recently, for instance.

I think if someone purchases an investment property today and in five years time they don't regret that decision then they can tell me - I told you so!

The impossibility of predicting when a speculative bubble driven by greed will end is well known. The purpose of this thread was to see if there had been any change in sentiment or slowdown in the buying frenzy. Initially I thought there might have been but now I doubt it, the madness may have a year or two to run yet.
 
ninsaga said:
in the meantime where houseprices have increased about 20% over the last 18mths+ or so & if it subsequently collapses & drops back say 10% ...does that still give those to say they knew it all along & that people were warned?

ninsaga
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I think prices will fall 50% peak to trough minimum, 75% wouldnt be an impossibility. 75% would bring us back to 1996 prices, 50% back to 2002. Admittedly, this differs slightly from what Irish real estate agents etc. will tell you.

Why? Nutshell answer in 2 parts:

(1) your house is worth what someone will pay for it
(2) rates are going up, WAAAAAAY up, combined with whats outlined below:

http://www.eecho.ie/news/bstory.asp?j=3984825&p=398484x&n=3984917
Debt levels increasing at fastest rate in six years

30/06/2006 - 12:19:20 PM

The level of debt in Ireland is increasing at its fastest rate in more than six years, according to figures published by the Central Bank today.

The bank said the total amount of money owed by private citizens increased by 29.8% in the 12 months to May of this year, the highest rate since March 2000.

A total of €6.6bn was borrowed during the month of May alone, pushing total debts up to €282.8bn.

The amount owed in mortgages increased by around €2.5bn last month, the amount owed in bank loans was up €3.5bn and overdrafts were up €862m.
 
walk2dewater said:
I think prices will fall 50% peak to trough minimum, 75% wouldnt be an impossibility. 75% would bring us back to 1996 prices, 50% back to 2002. Admittedly, this differs slightly from what Irish real estate agents etc. will tell you.
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...ok so how much more will they advance before houses drop back to the norm of 10 years ago?

I find it difficult to even comprehend this figure..... that would be a total economic collapse.

ninsaga
 
€282.8b... that's €282,800m divided by 4.2m is €67,333 of PERSONAL debt for every single living person in Ireland . No folks, this is not "normal"...
 
ninsaga said:
...ok so how much more will they advance before houses drop back to the norm of 10 years ago?
Click to expand...

Doesnt matter whether they advance 1% or 100% from here, it's pure speculative behaviour driving this market. Prices will revert to some economically rational level i.e, based on peoples ability to actually pay for them, that is of course, after we go through a 'bust' period of total pessimism/fear about property.
 
walk2dewater said:
€282.8b... that's €282,800m divided by 4.2m is €67,333 of PERSONAL debt for every single living person in Ireland . No folks, this is not "normal"...
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Its not personal debt its private sector debt but its still huge. But this growth of around 30% means that if it grows at this rate for 8 more years we'd have 2 trillion euro in debt! of which 900billion would be mortgage debt. if houses grow at 10% per annum for those 8 years then mortgage debt would be roughly the same as the value of all property in the country! Obviously this is unlikely to happen as lending will have to slow and this slowing in lending will hit housing market
 
walk2dewater said:
The bank said the total amount of money owed by private citizens increased by 29.8% in the 12 months to May of this year, the highest rate since March 2000.

A total of €6.6bn was borrowed during the month of May alone, pushing total debts up to €282.8bn.

The amount owed in mortgages increased by around €2.5bn last month, the amount owed in bank loans was up €3.5bn and overdrafts were up €862m.
Click to expand...

Did the reporter get it wrong?
 
If prices can fall by 70% in Tokyo, then 50% in Ireland seems entirely possible. My own theory is that capital values will reflect a 7% net annual return on rental incomes, though I'm beginning to think that 8% will be nearer the mark.

Random fact: The inventory of homes for sale in Arizona on 1 July 2005 was 10,761 on the 21 of June 2006 the inventory was 43,500.
 
So if enough people go around saying that the housing market is going to collase............then the housing market will collapse. Spread gloomy news & it will travel & lead to some effect....
The market is built on a high degree of sentiment & emotion.
 
ninsaga said:
So if enough people go around saying that the housing market is going to collase............then the housing market will collapse. Spread gloomy news & it will travel & lead to some effect....
The market is built on a high degree of sentiment & emotion.
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If enough people go around saying that housing market is booming and prices will only ever go up ..... then housing prices will spiral upwards.... Spread the mania to buy property and it will travel and lead to some effect...

IMO cheap, high-quality, well-serviced housing is a basic human need that should not be prone to boom/bust manias. If the price of food doubled twice in the last 10yrs would we be rejoicing?
 
sentiment isnt everything, fundamentals of market count as do credit incomes yields etc. sentiment can be rational as it was for long period in ireland but sentiment can become irrational and exuberrant as it is now and sentiment becomes detached fromt he underlying fundamentals. how many people borrowing 500k now over 35 years realise they are really paying close to one million including interest??
 
bearishbull said:
No,only around 23% according to the CSO.
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Actually my analogy is flawed. Housing is the means to produce shelter, now and in the future. The price represents the market value of the future stream of shelter it provides. The correct analogy would be with a market in "lifetime food machines"....hmmm
 
They will fall 30-50% in REAL terms not in absolute terms and with higher falls in back of beyond areas and Courtown and places.

70% , I think not at all.
 
walk2dewater said:
Did the reporter get it wrong?
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He or she has included all private sector credit. You should really look at mortgage lending which is now circa €108bn. We have now matched and overtaken the UK on a per capita debt basis, which I imagine makes Ireland the most in debt nation in Europe.
 
Neffa said:
...which I imagine makes Ireland the most in debt nation in Europe.
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Well, in that case we can expect lots of media coverage as our leaders speak on the issues of responsible lending, over indebtedness and the
unprecedented risks that Irish borrowers now face.

Or...maybe not, wrong country eh ?
 
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