Housing bubble starting to pop?

SkepticOne

faceman wrote:

true true!

how many of the pessimists on this thread own their own property and if u do, are you jumping ship?

I think most people who are "jumping ship" won't be posting on threads like this until after they have sold, if at all. They will do their selling quietly if possible. They need other people in the market to buy their properties and contributing to a thread like this doesn't make much sense at leat to the extent that threads like this have influence.

"Jumping ship" makes it seem like letting people down but it is not like that really. It is simply taking profit. There's a time to buy and a time to sell.

Also I disagree with the use of the word "pessimist". I believe that a bubble exists in the Irish market which will burst. But I am optimistic that this will happen. I believe a lot of damage is being done to the Irish economy by this bubble, the bursting of which will expose the underlying problems and allow them to be dealt with.

The pessimistic view, imo, would be the continuing of high land and property prices eroding Ireland's competitiveness. Landlords also (I believe you are one) should be optimistic that the bubble will burst as this will allow them to buy more property at lower prices and better yields. At the moment rental yields on property are two to three percent - historically low - making property not worth bothering with.

SimpleSam06

faceman wrote:

well one thing is for sure, its all tosh what anyone says. Cos with the exception of some minute optimist economists, no one has got it right - including IMF, World Bank and The Economist magazine.

I'd be cautious about dismissing the opinion of these bodies out of hand. All anyone can do is make an educated guess, really, and they are far more educated in these matters than us boardsies. Besides, the American property boom started at the same time as the Irish one; now the American property bubble is in a state of rapid collapse. What makes you think we'll do any better?

faceman wrote:

Given immigration is as high as it is, we'll never be short of tenants or FTB's.

But we are already short of tenants in many parts of the country, and regardless of the line being flogged by EAs and banks, immigrants aren't buying houses; they are sending money home to buy a house in their own country. 99% of them anyway. They aren't the next group of people to be suckered into the pyramid scheme.

faceman

SimpleSam06 wrote:

the American property boom started at the same time as the Irish one; now the American property bubble is in a state of rapid collapse. What makes you think we'll do any better?

i think im goin to pass on future property debates as they go round in circles (no offense to you my good man!) i dont believe the irish market can be compared to usa or indeed uk. Beside the age old debate on shortage of land which can be argued both ways, my principal argument is this. Dublin is the main CBD (central business district)in ireland. Until the government comes up some brainwave its goin to impact property prices in dublin and surrounding areas. Granted property prices may stagnate in more rural areas, even lesser cities but dublin wont change.

SimpleSam06 wrote:

But we are already short of tenants in many parts of the country, and regardless of the line being flogged by EAs and banks, immigrants aren't buying houses; they are sending money home to buy a house in their own country. 99% of them anyway. They aren't the next group of people to be suckered into the pyramid scheme.

a recent study (sorry cant remember the source but it was on the rte news) showed that 20% of FTB's are foreign nationals. Does anyone have the stats on what percentage of foreign nationals come to live in dublin? I would expect it to be high thus further fueling tenancy and medium to long term, property demand in respective areas.

im now officially tired of property debates. too many people take it very personal which is not right.

Shane™

faceman wrote:

i dont believe the irish market can be compared to usa or indeed uk.

Yeah our house prices are way more bloated than their's

miju

faceman wrote:

a recent study (sorry cant remember the source but it was on the rte news) showed that 20% of FTB's are foreign nationals.

theres a post over on AAM about how miniscule this figure actually is , 20% of 36% (the total percentage of FTB's last year)

then when you get that figure compare it to the total immigration total , drop in the ocean is all that 20% is and is just EA's etc trying to talk up the property market

Sizzler

SimpleSam06 wrote:

Yes sizzler, Pa is single handedly bringing down the property market. Be sure and send him an invoice for the difference when your investment properties collapse. Or, alternately, you could find a few articles and graphs to support your own point of view, and actually add something to the discussion besides personal abuse.

LOL ! Yeah its all Pa's fault, Im sure there will be a few heavies looking for him, he better take his own advice and sell up before we're reading about him on the front page of the indo

Personally I dont give a swizzler what way the market goes because at the end of the day forecasting X Y & Z scenarios aint worth a w@nk unless you have serious outlays in the property market and from following this thread for a while now it would appear that there isn't many people who fall into that bracket.

If you arent a serious investor you have to ask yourself why you feel the need to keep posting about the arse falling out of the market? Is it boredom? Sadism? Sh1t stirring? Following the crowd? Is there really fcuk all else to talk about but the ever coming downturn in the market?

Fairs fair, theres people posting here who have a vested interest and genuinely come on here to discuss but there is several people who seem happy to engage in perpetual trolling.

SimpleSam06

faceman wrote:

i think im goin to pass on future property debates as they go round in circles (no offense to you my good man!)

Well changes in the property market take months and years, while we are posting daily. You have to expect a little redundancy in that.

faceman wrote:

too many people take it very personal which is not right.

I guess having 30+ years of your life sold away tends to get people's hackles up!

SimpleSam06

Sizzler wrote:

If you arent a serious investor you have to ask yourself why you feel the need to keep posting about the arse falling out of the market? Is it boredom? Sadism? Sh1t stirring? Following the crowd? Is there really fcuk all else to talk about but the ever coming downturn in the market?

Construction and property sales form over 20% of all revenue collected by the Irish goverment. And couple that with our tax advantages for multinationals drying up, meaning they leave, and you have a very serious problem indeed. We're basically down to tourism for income, and we've already torn the arse off that with overpricing. If the property market collapses, no one is coming out the other side smiling.

You seem to feel that the only ones who have a "right" to speak should be property owners. They had their say, and it landed us in the mess we are in today, via the well trodden paths of greed and lack of gumption. And hey, if you don't like the discussion, heres an internet.

Sizzler wrote:

Fairs fair, theres people posting here who have a vested interest and genuinely come on here to discuss but there is several people who seem happy to engage in perpetual trolling.

Indeed.

Sizzler

SimpleSam06 wrote:

Construction and property sales form over 20% of all revenue collected by the Irish goverment. And couple that with our tax advantages for multinationals drying up, meaning they leave, and you have a very serious problem indeed. We're basically down to tourism for income, and we've already torn the arse off that with overpricing. If the property market collapses, no one is coming out the other side smiling.

You seem to feel that the only ones who have a "right" to speak should be property owners. They had their say, and it landed us in the mess we are in today, via the well trodden paths of greed and lack of gumption. And hey, if you don't like the discussion, heres an internet.



Indeed.

Thanks for the google link, never heard of that :rolleyes:

You are carrying the weight on your shoulders there mate with your amazing predictions for whats in store for Ireland in the coming years :eek:

Property owners landing us in a mess...lmao ! One of the best periods for the Irish economy EVER and we're hitting the self destruct button? If you dont like the house prices then dont buy I have yet to meet a punter who has LOST money on a house....and for the most part the majority of punters out there buy gaffs to live in...not to try and make a few quid, these people are the minority.

Ireland heading for an economoy based on tourism ....ROFL
Simplesam is right

D'Peoples Voice

faceman wrote:

I still believe that there is no correlation between commercial and residential property prices.

I assume this is a mis-type, you don't really mean to say "no" correlation, you mean low correlation at best.
They are correlated, maybe not highly correlated, after all; is commercial property used for offices correlated with that of property used for the retail or industrial sectors? The last few years would suggest each of these have been cyclical at different times. However over the long term they have all been correlated for several reasons. Here are just two or three reasons off the top of my head!

all have a negative relationship with interest rates, mainly due to interest repayments

when development land is being rezoned, the developer will tend to consider what type of rezoning would earn him/her the best return, hence the price of one sector determines the supply in another

all these sectors require construction companies & tradesmen to build the premises, any excessive demand for staff/materials in one sector can drive up the costs for all the other sectors

higher residential property prices give people more collateral to borrow against and hence drive up spending power. This creates more profits for retailers and drives the demand for more retail properties

higher residential property prices on the other hand drive up mortgage repayments which in turn drive up wage demands in national wage agreements, this hits companies profits and leads to a decline in the rate of companies setting up, which means lower demand for commercial property

higher rents for companies/retailers on grafton street may drive up their costs, they try to pass them on, this causes higher output prices and inflation. If people cannot have their wages increased in line with inflaiton, their disposable income falls, which means the amout they can pay for rent or a mortgage falls, and therefore the prices of houses will inevitably be hit

and that's not even starting on the opportunity cost of investors money!

SimpleSam06

Sizzler wrote:

Thanks for the google link, never heard of that :rolleyes:

Well you learned something new today. Next week we move on to basic grammar.

Sizzler wrote:

Property owners landing us in a mess...lmao ! One of the best periods for the Irish economy EVER and we're hitting the self destruct button? If you dont like the house prices then dont buy I have yet to meet a punter who has LOST money on a house....and for the most part the majority of punters out there buy gaffs to live in...not to try and make a few quid, these people are the minority.

Yes a "boom" that will have to be paid off over the next 30 to 40 years. What a great idea.

Sizzler wrote:

Ireland heading for an economoy based on tourism ....ROFL
Simplesam is right

You're well out of order, son.

Sizzler

SimpleSam06 wrote:

Yes a "boom" that will have to be paid off over the next 30 to 40 years. What a great idea.

Major LOL. FFS ! Its a HOUSE ! What do you expect? Pay it off in 3 years like a car loan

If you are that hungry for cash and the idea of borrowing capital sums for a rigid structure scares you so much just head down the bookies and try and make a few quid there

miju

Sizzler wrote:

I have yet to meet a punter who has LOST money on a house....

.......

Ireland heading for an economoy based on tourism ....ROFL

thats not to say people won't lose money , i believe the phrase "negative equity" is something us Irish will be learning the meaning of with gusto within the next 1 year or so

also don't know what you find so funny about tourism being the main industry in our economy , it was for years and it STILL a very large proportion of it

Sizzler wrote:

Major LOL. FFS ! Its a HOUSE ! What do you expect? Pay it off in 3 years like a car loan

I think what he is getting at is that historically the average mortgage length for a house has been 20-25 years , this has now doubled to 40 year mortgages in order for them to be "affordable" , something amiss there don't you think?

SimpleSam06

Sizzler wrote:

Major LOL. FFS ! Its a HOUSE ! What do you expect? Pay it off in 3 years like a car loan

Oh, we are talking about a single house now? Here was me thinking we were talking about the entire economy. If we invented some new and never before heard of soap that for some reason could only be made in Ireland, and the economy was booming based on its exports, that would be a good thing.

Borrowed money which is borrowed for the basic purpose of borrowing more money, that is a bad thing. Because sooner or later your money has to be paid back, since the value of what you bought with it has dropped considerably. This would be the underlying premise of a housing bubble that goes pop.

Sizzler wrote:

If you are that hungry for cash and the idea of borrowing capital sums for a rigid structure scares you so much just head down the bookies and try and make a few quid there

That just makes no sense at all. And I read it three times.

Sizzler

SimpleSam06 wrote:

Oh, we are talking about a single house now? Here was me thinking we were talking about the entire economy. If we invented some new and never before heard of soap that for some reason could only be made in Ireland, and the economy was booming based on its exports, that would be a good thing.


Borrowed money which is borrowed for the basic purpose of borrowing more money, that is a bad thing. Because sooner or later your money has to be paid back, since the value of what you bought with it has dropped considerably. This would be the underlying premise of a housing bubble that goes pop.

Very observant, that generally hows the lending system works.
As Ive already said...crikey :mad: People generally buy property to fcuking live in it not to play the property game.The average punter on the street wants a gaff to live in...they dont sit down and work out their outlay over 40 years and then say...oh we might lose on this ! They dont give a hoop because they want somewhere to live LONG TERM. Our previous generations bought gaffs and prices have fluctuated but I bet you would do well to find one of them that lost on it.Get it into your skull that the average gaff wont lose its residual value.The fantasy gain that most people have made on their gaff in recent years wont matter a fcuk even if prices drop 10% in the next 2 yrs because the odds are they made 20-30% on it anyway in that time.

A single house ? Oh FFS

Very observant, that generally hows the lending system works.
As Ive already said...crikey :mad: People generally buy property to fcuking live in it not to play the property game.The average punter on the street wants a gaff to live in...they dont sit down and work out their outlay over 40 years and then say...oh we might lose on this ! They dont give a hoop because they want somewhere to live LONG TERM. Our previous generations bought gaffs and prices have fluctuated but I bet you would do well to find one of them that lost on it.Get it into your skull that the average gaff wont lose its residual value.The fantasy gain that most people have made on their gaff in recent years wont matter a fcuk even if prices drop 10% in the next 2 yrs because the odds are they made 20-30% on it anyway in that time.

I found a website for you to play on for the rest of the day since you have such a fascination with bubbles and them popping

http://www.bubbles.org/

SimpleSam06

Sizzler wrote:

A single house ? Oh FFS

Very observant, that generally hows the lending system works.
As Ive already said...crikey :mad: People generally buy property to fcuking live in it not to play the property game.The average punter on the street wants a gaff to live in...they dont sit down and work out their outlay over 40 years and then say...oh we might lose on this ! They dont give a hoop because they want somewhere to live LONG TERM. Our previous generations bought gaffs and prices have fluctuated but I bet you would do well to find one of them that lost on it.Get it into your skull that the average gaff wont lose its residual value.The fantasy gain that most people have made on their gaff in recent years wont matter a fcuk even if prices drop 10% in the next 2 yrs because the odds are they made 20-30% on it anyway in that time.

If you can't be bothered to read the rest of the thread where the number of investors vs. any other kind of buyer, and the enormous number of empty properties throughout the country are clearly explained, you really have no business posting these rambling semi-anecdotes.

Sizzler wrote:

I found a website for you to play on for the rest of the day since you have such a fascination with bubbles and them popping

http://www.bubbles.org/

Yes indeed, and that sharp pain just behind my left eye tells me that yes, I actually got stupider after reading your post. I'm divided as to whether its just you, or you are trolling (making incendiary comments in order to provoke a reaction and to disrupt the flow of the discussion). In either case, I won't be feeding you any more.

Sizzler

SimpleSam06 wrote:

If you can't be bothered to read the rest of the thread where the number of investors vs. any other kind of buyer, and the enormous number of empty properties throughout the country are clearly explained, you really have no business posting these rambling semi-anecdotes.


Yes indeed, and that sharp pain just behind my left eye tells me that yes, I actually got stupider after reading your post. I'm divided as to whether its just you, or you are trolling (making incendiary comments in order to provoke a reaction and to disrupt the flow of the discussion). In either case, I won't be feeding you any more.

I suppose I have been blinded by the vast number of inhabited properties in the country and have thus created a shield to all of those vacant properties you speak of lol !

Incendiary comments FFS. Flow of discussion? I think I have burst your bubble and you dont like it

Best of luck with the rest of your ramblings...now get on your pushbike and go take a few more pics of all the empty gaffs in Galway and pics of investors who have been financially violated by the future struggling tourism based economy, Im sure they are all queueing outside their local citizens advice bureau looking for solice

Hitchhiker's Guide to...

SimpleSam and Sizzler - you've both made your points. Now let the thread get back to a normal discussion. Take a break from this thread until Monday next, or you'll both be banned from the business/economy forum.

finnpark

So the conclusions I take from this thread............

1. House prices are more or less at a peak.

2. Banks and others in the know are selling up.

3. Future of economy looks bleak due to government blunders.

4. Unemployment and suicide to sore

5. House market to collapse.



Sell your property now before its too late. Don't say you havn't been warned. Major crash on the way.

jesus_thats_gre

Sizzler wrote:

People generally buy property to fcuking live in it not to play the property game.The average punter on the street wants a gaff to live in...they dont sit down and work out their outlay over 40 years and then say...oh we might lose on this !

You are right, and if this was the main factor in driving the sector then things would be rosey.. Unfortuantely, the average punter is not what is driving the property industry at the moment. Nearly 40% of new hoursing built in recent years has been bought up by investors/speculators with the sole intention of making loads of money. This is creating the effect of a property shortage and driving prices to a level that the econmy cannot sustain in the short to medium term.. In 30/40 years things will be ok.. In 5 to 15 years, things will not be ok.

finnpark

jesus_thats_gre wrote:

You are right, and if this was the main factor in driving the sector then things would be rosey.. Unfortuantely, the average punter is not what is driving the property industry at the moment. Nearly 40% of new hoursing built in recent years has been bought up by investors/speculators with the sole intention of making loads of money. This is creating the effect of a property shortage and driving prices to a level that the econmy cannot sustain in the short to medium term.. In 30/40 years things will be ok.. In 5 to 15 years, things will not be ok.

Yes that would seem to make sense. I think there is no question that the prices of houses will at least level off. But then the 40% of investors sell up and decide to take no more risks as the boom is over. Then there is a crash. Availbility exceeds demand is where the problem lies and this is close to becoming a reality. A rise in interest rates on top of everything along with an economic dip and a major crisis in the housing market occurs. Seems plain as day to me. Like I said before its time to start selling and fast.

SkepticOne

jesus_thats_gre wrote:

You are right, and if this was the main factor in driving the sector then things would be rosey.. Unfortuantely, the average punter is not what is driving the property industry at the moment. Nearly 40% of new hoursing built in recent years has been bought up by investors/speculators with the sole intention of making loads of money. This is creating the effect of a property shortage and driving prices to a level that the econmy cannot sustain in the short to medium term.. In 30/40 years things will be ok.. In 5 to 15 years, things will not be ok.

I think in addition to the specuvestors, in recent years there has been a tendency among FTBs to "get on the ladder" at whatever cost by buying what they would not dream of living in in normal circumstances, purely for fear that they will be priced out of the market if they don't buy. These, for example, would be the people queuing up over night for small apartments in the outer suburbs of Dublin. They are another group who won't be happy if house prices fall considering that far better places are available to rent for the same or less than the interest only portion of their mortgage.

miju

jesus_thats_gre wrote:

This is creating the effect of a property shortage and driving prices to a level that the econmy cannot sustain in the short to medium term...

except that there is no shortage and an overhang of hundreds of thousands of empty properties have been discovered during the last census (not including holiday homes)

SkepticOne wrote:

These, for example, would be the people queuing up over night for small apartments in the outer suburbs of Dublin. They are another group who won't be happy if house prices fall considering that far better places are available to rent for the same or less than the interest only portion of their mortgage.

indeed it will be these people in the commuter towns who will be among the first to experience negative equity IMO , alot of people do buy these properties with the intention of "trading up" shortly after but of course fairly soon i fear that these people will be in a situation where they are stuck in these properties cant sell them and are miles from family and friends

D'Peoples Voice

finnpark wrote:

A rise in interest rates on top of everything along with an economic dip and a major crisis in the housing market occurs. Seems plain as day to me. Like I said before its time to start selling and fast.

Given that inflation rates in the Euro Area's biggest economy are a serious factor in determining the direction of european central ank interest rates,
Does anyone else think interest rates will surely increase when the standard VAT rate in Germany increases by 3 percentage points in 2007?
http://www.oecd.org/document/63/0,2340,en_2649_201185_36782015_1_1_1_1,00.html
I always believed that higher VAT prices drive retail prices and hence inflation! To be fair though, at least the German government will be running a smaller deficit(less inflationary fiscal policy) overall! Still I take back any comments I ever made that the ECB would stop after it increases it's rates in October and December. At least another 1% expected next year in my opinion.

johnmul46

Myself and a friend have started a web site. The web site is www.rateyourauctioneer.com

This is a public forum where people can rate auctioneers when selling or buying a home and others can view this information to help them choose an auctioneer. If you have used a particular auctioneer (or know someone who might) in the past then it would be great if you could possibly submit a rating for them (just takes a minute).
If you could also forward this to your friends and family I would really appreciate this. This website has just gone live today so we could use all the help we could get.

Please let me know what you think.

faceman

D'Peoples Voice wrote:

Does anyone else think interest rates will surely increase when the standard VAT rate in Germany increases by 3 percentage points in 2007?

i saw this a while ago. I would expect the VAT increase to impact consumer confidence and spending even further thus easing inflation slightly. I expect however a rush of consumer spend in the months coming up to the increase thus forcing inflation up temporarily.

gurramok

faceman wrote:

i saw this a while ago. I would expect the VAT increase to impact consumer confidence and spending even further thus easing inflation slightly. I expect however a rush of consumer spend in the months coming up to the increase thus forcing inflation up temporarily.

Europe's top banker at ECB has just said that the Irish property market is in his words 'abnormal' and his view is certainly respectable:)
http://www.rte.ie/business/2006/0831/property.html

Pa ElGrande

gurramok wrote:

Europe's top banker at ECB has just said that the Irish property market is in his words 'abnormal' and his view is certainly respectable:)
http://www.rte.ie/business/2006/0831/property.html

He said that at ECB level they are more concerned with the overall euro area population of 313 million, and not Ireland's 4 million, so he would'nt comment on countries individually.

Absolutely clear message there with implications for Ireland in that there can be no soft landing since we have no abilty to control external factors such as interest rates and foreign direct investment.

Eight Market Spins About Housing by Perma-Bull Spin-Doctors...And the Reality of the Coming Ugliest Housing Bust Ever….
http://www.rgemonitor.com/redir.php?sid=1&tgid=10000&cid=143482 [ adobe acrobat required]

D'Peoples Voice

faceman wrote:

i saw this a while ago. I would expect the VAT increase to impact consumer confidence and spending even further thus easing inflation slightly. I expect however a rush of consumer spend in the months coming up to the increase thus forcing inflation up temporarily.

Germany- IG Metal Union seeks 7% wage increase
Trade union IG Metall will be demanding a 7 pct wage increase for about 5,000 workers in the steel and iron industries in the states of North Rhine-Westphalia, Lower Saxony and Bremen.

Employers seek increasing prices
Some companies are already feeling the pinch of rising costs.
``We expect price increases in the coming quarter,'' Wolfgang Leese, chief executive officer of Salzgitter AG, Germany's second- largest steelmaker, said in an interview Aug. 10. ``Costs have climbed and we have to pass that on somehow.''
http://www.bloomberg.com/apps/news?pid=20601100&refer=germany&sid=aAEuKeDKphAs
If the cost of steel continues to rise, it will feed through to the cost of inputs for so many construction and manufacturing companies across Europe, that I've no doubt they too will pass on the costs.

Also faceman, your argument about VAT reducing the level of spending and thus easing inflation slightly was something I thought about. You know you think of people's price elasticity of demand and say that higher prices reduce demand. However when you realise that Germany is an economy that is being driven by exports, there is every chance that the level of spending will continue to increase, unless the euro strengthens greatly.

Pa ElGrande

The slowdown in the US property market means that it's a great time to get bargains, according to a US-based property expert who is coming to Ireland to present a series of seminars about purchasing property in Florida and to promote two condo hotel projects to Irish investors.

Businesswoman and estate agent Brigitte Hunt, who has handled the sale of some of Donald Trump's property developments, will be offering her advice and assessment of the Florida property market where rising interest rates along with other factors have put a halt to the gallop of the once booming property market. Prices have fallen by as much as 15 per cent.

Weather, she says, has no impact on the market in Florida. "Everybody knows that the low season in September and October is the hurricane season. It's been like that forever and will remain so. People are still buying."

Property trends, investment turnover and site development in Florida will be some of the areas discussed in Hunt's property seminars, which will be held in Dublin, Galway and Cork next month.

The dramatic slowdown in the Florida market has been fuelled by interest rates and speculation, according to Hunt. This, however, she insists is good news for the smart investor.

"It's a much better time to buy now than last year because prices were really inflated. Now the market is very much a buyer's market and it is a good time to get bargains." Developers are offering great deals and if investors are willing to wait at least three and preferably five years they will see capital growth, she says.

Florida slump 'good news for smart investors'
Fiona Tyrrell reports
http://www.ireland.com/newspaper/property/2006/0831/1156791287142.html

How did Fiona Tyrell keep a straight face when putting this piece together? Smart investors have fled this market long ago, others are cutting their losses and selling. Who in their right mind is buying for capital appreciation when the market is clearly in a downward spiral? The slowdown in the US is rapidly moving to a slump. Who says the weather does not affect preoperty in Florida?, remember Hurricance Andrew in 1992. Surely there are plenty of buyer's in the US market? otherwise why make a 3,000 mile journey to Ireland to find more?
How many would classify Donald Trump as a 'smart investor', if so, you do realise he has sold out of this scheme!
"The dramatic slowdown in the Florida market has been fuelled by interest rates and speculation", Miss Hunt even tells you why you should not buy at current price levels.