Housing bubble starting to pop?

shaptakster

HashSlinging wrote:

made a few phone calls this week as im still looking for a house, very very intersting times. I've had two estate agents drop prices on two houses im interested in, one dropped the price from 425k to 381k and the other dropped ..... wait for it...... wait.... for..... it...... from 470k to 381k.... unreal

Lies.
Tell us who the agents are and which properties. Maybe they have something going cheap for myself and the missus

faceman

shaptakster wrote:

Lies.
Tell us who the agents are and which properties. Maybe they have something going cheap for myself and the missus

i agree. Its either lies or he was trying to buy a gaff in darndale!

el diablo

faceman wrote:

So do you believe we have a crash on our hands?

too soon to say, but I'll be following this thread with interest....;)

bounty

i reckon we're at the beginning of anxiety



el diablo, you stole my avatar!!

ionapaul

Not sure about that, still a whole lot of people around who firmly believe 'you can't lose money on property', 'property always goes up' and 'i own 3 investment properties but don't know what yield means'! Lots of people are still in the euphoria stage, dreaming of becoming millionaires without having to work, just by borrowing money from the bank and buying house after house...

It is truly going to be horrible on the way down for many, many people.

el diablo

bounty wrote:

el diablo, you stole my avatar!!

oh, I'd better find a new one. I wish we could use our own avatars....:rolleyes:

shaptakster

ionapaul wrote:

Not sure about that, still a whole lot of people around who firmly believe 'you can't lose money on property', 'property always goes up' and 'i own 3 investment properties but don't know what yield means'! Lots of people are still in the euphoria stage, dreaming of becoming millionaires without having to work, just by borrowing money from the bank and buying house after house...

It is truly going to be horrible on the way down for many, many people.

And lots of people have actually become millionaires. Most of my mates have while i've been waiting to get on the ladder over the years. We only really decided we wanted to buy a house in the last year when the missus got pregnant. Security is a major, major factor when there is a baby on the way.

My problem was solved last night though.
My brother owns 6 properties without mortgages (he sold another 7 houses in south Dublin over the last 2 years (the newest of which he bought in 1999) so he's not short of a bob or 2. He doesnt think there will be a crash, but is playing safe and banking a few quid. He always said, have at least half your assets in cash earning above inflation nice and safe somewhere.). He will keep the rest of the houses as there is nothing owed on them.

But here is the best bit.
He Lets my mother and father live in one rent free (they sold theirs and are living the life off the proceeds) so i asked why he doesnt do the same for me the other day, and he must have been feeling soft and said he will. on condition that i put the money i would have paid for a mortgage into a pension scheme for myself and a trust fund for the baby (The missus has a civil service pension scheme). We're now going to be living in a 3 bed house in Blackrock for free. Any payments we make are going back into our pockets with a pensions tax break too.

It works for us as if prices went much higher we would never ever afford a house.
We dont have to buy a house or pay rent and i'm forced to sort out a pension so i'm happy.
Worst case scenario we end up paying rent again at some stage in the future if he decides to sell the house, but i know him, he wont. There may be tax implications, but he has a perfectly legal way around that too.

Out of the property rat race and not a care in the world about property prices anymore, so happy days.

The point is, i've noticed something. I now find myself not wanting a crash as much as i did yesterday And i'm looking at the whole situation with objective eyes now that i dont actually need a crash. Amazing how things change.

mad m

@shaptakster

Thats great,your on the pigs back and goodluck with it...Wish I had a brother like yours.:)

ionapaul

Yep, fair play to those who actually made their millions with this - likewise (I lived in California from 1999-2004 for graduate school and work) I know a good few over there who made their millions from the dotcoms BEFORE the crash...it can be done!

I remember buying Iona Technologies at $52 and selling just weeks later for $77, then imagine my regret seeing it hit $100 weeks after that! Course you can't ignore the fundamentals for ever...think it is trading around $5 at the moment! What a rollercoaster ride that bubble was glad I lived through it. I do honestly think our own bubble will be more horrific for those involved, it will ruin lives and careers

bounty

I found this article very interesting..

Growing numbers of hedge funds have placed bets on a slump in the US housing sector in recent weeks

el diablo, you like letterman?

Sponge Bob

David has arrived at conslusions based on funny stats. He is running with figures of 230000 empties nationwide (13.5% of our housing stock) supplied by Davy Stockbrokers and NOT the figure of 275000 empties (16% of our housing stock ) supplied by the CSO.

As Davy did not send anyone out I will go with the CSO 16% figure and thanks Dave.

Dave also got confused between Westport in Mayo where there were no tax incentivised empties and the Shannon catchment where there is a large number of these properties.

Neverthless he has noticed the LARGE number of empties in Ireland just as I have done .

http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=DAVID+McWilliams-qqqs=commentandanalysis-qqqid=17687-qqqx=1.asp

Even if we accept that Ireland might have a slightly different history, are you comfortable with the fact that in Britain - which has a similar home owning and holiday home buying culture, the corresponding figure is 3.2 per cent of all houses? Here one house in seven is empty; over there it is one house in every 31.

There I was thinking all along that we had a housing crisis, with prices rising at double digit rates because we didn’t have enough houses.

Pity he did not read this thread then, he would be a helluva lot MORE worried.

Normally, value is some derivative of what the asset earns. But if the asset is earning no income, how does its price continue to rise in the aggregate?

The last time we saw assets being priced with no reference to their underlying yield was in the dotcom boom. Remember that?

Property can only go up in Ireland David, we are "different" and "special" here.

In the years ahead, these ghost villages, like our famine villages, may stand testament to a great tragedy which, although predicted by concerned observers, was never fully appreciated until the morning the crops failed

Once the tax breaks run out in Carrick on Shannon it will be a strange place David, yes. More in the link above about the threat to our lemming like "banking system" and how we may end up paying tax to bail the stupid fools out

el diablo

bounty wrote:

I found this article very interesting..



el diablo, you like letterman?

I just picked a random avatar and it happened to be Letterman...:p

Shaptakster:

wow nice one! good to hear a positive story like yours

shaptakster

Hailee Fat Mushroom wrote:

but I find the whole housing boom almost scripted to ensure that no sooner had Ireland and its people seen unprecedented wealth creation, it was stolen away by the banks, the developers and the first waves of opportunist landlords.

I think there have been several waves of developers and opportunist landlords over the past 10 years.
I went of to Spain for years and had a great time there (wasting in the sun).
Meanwhile my mates were buying houses against my advice as there was going to be a crash.
The conversation going on in this thread goes on every year. We hope for a crash and it doesnt happen.

The boom cant last forever, but it sure is lasting a long time.

ronbyrne2005

shaptakster wrote:

I think there have been several waves of developers and opportunist landlords over the past 10 years.
I went of to Spain for years and had a great time there (wasting in the sun).
Meanwhile my mates were buying houses against my advice as there was going to be a crash.
The conversation going on in this thread goes on every year. We hope for a crash and it doesnt happen.

The boom cant last forever, but it sure is lasting a long time.

this time it's different. It made sense to buy ten or even 5 years ago, very few if any commentators were saying so. The banks changed the rules by offering longer terms 30/35 instead of traditional 20/25 which made it possible to borrow more than before, also the low low interest rates facilitated geven greater borrowing. Now we cant extend teh borrowing period much more if any and interest rates are rising higher and reducing amount people can borrow. Incomes also rose substantially over past ten years allowing us to borrow more but with globalisation speeding up theres little room for incomes to rise by as much in the next ten years. Add in the large increase in mothers working and dual income households which was a one off boost to house priuces and they cant rise by much from where they are now for at least the next ten years. They may fall by 50% in next few years before recovering to current prices in ten years time.

coolhandluke

Exactly,every factor that worked in favour of the boom for the last ten years are now working against it.

yes there have been threads about how possible house market crashes - a crash will always suit some people but I agree with ronbyrne2005 this time its different there is so many reasons why its unsustainable now
the past threads have never gained so much interest there is a definate change its in the air! whats this threads At 275,000 hits nearly - lol - nearly basing a case for a property crash on the number of hits on a website!

SimpleSam06

Deleted User wrote:

whats this threads At 275,000 hits nearly - lol - nearly basing a case for a property crash on the number of hits on a website!

I think thats 26,000 odd there, unless I'm going crosseyed, and most of that would be refreshes from a few hundred people. Still, its fairly significant when you think about ripple factors. The mainstream media newspapers are having an exponentially greater effect. Although you never know, there might be the odd reporter in our ranks! Oh yes and Bounty, we are definetely into the denial stage.

i meant over on askaboutmoney.com with the number of hits

even with the "refresh factor" the "ripple effect" is massive!
i agree with it being the denial stage. i think alot of property outside of dublin and its large commuter zones peaked last spring

redspider

One aspect to remember when thinking about the housing market is that it is not uniform. So some places will keep on rising while others stall, hiccup, etc. In fact, its difficult to get the real feel of the marketplace since the information of every transaction is not put into the public domain. It probably should be so that people can actually know whats going on in the market. As such, there are several surveys and even though they use 1000's of houses in their samples the surveys never agree.

The other thing to consider is that when prices are softening (I see that the Sherry Fitzgerald economist has already said that they are), the surveys published will lag reality and also mask lack of demand. House price market rises and drops tend to jitter and are stoichastic (I think), rather than being sinusoidal curves so the current market feeling can only be anecdotal. And we all have different perceptions of what it is depending on what we see being sold and bought in the marketplace.

ionapaul wrote:

Not sure about that, still a whole lot of people around who firmly believe 'you can't lose money on property', 'property always goes up' and 'i own 3 investment properties but don't know what yield means'! Lots of people are still in the euphoria stage, dreaming of becoming millionaires without having to work, just by borrowing money from the bank and buying house after house... It is truly going to be horrible on the way down for many, many people.

It could be horrible, but only for a minority of people. However, due to multiplier effects and sentiment who knows what it will do to confidence and the economy. Currently there is over-confidence as in those 'property cant lose' opinions, but whether we will ever get to major under-confidence is another story. And such a change wont happen quickly.

25% of the Irish economy is now tied up with property. 15% of Irish conversation is tied up in it! It affects us all no matter what.

My advice to people is dont over-extend yourself. Better play safer and rue the chance of a missed 50k or so upside on an investment than be left with 50k in negative equity and a rental 'income' which is less than your mortgage costs. Lives in previous generations and places have been forever affected by similar scenarios, such as in the UK and Japan. It can happen here, so be aware and make your decisions accordingly.

As to whether the market is now dropping - not yet according to the survey's, and the anecdotal evidence I had of a sale last week was that for that particuar house it wasn't. AMV of 1.3m and sold for 1.5m. Others have mentioned Willow Park in Athlone, but that is like Beruit in its bad days so is not a true reflection of the market per se. There are a lot of houses on the market though it has to be said. I think myhome.ie was sold to the Irish Times at the right time, AIB sold their HQ at the right time, etc.

Redspider

finnpark

RTE Six One news are carrying the story this evening. And they mention the "bubble"

finnpark

Eddie Hobbs is also covering it next Monday night.

He will amke the comparison between Viagra and the Irish property market.

The Irish property amrket is on Viagra but it will pop soon and come down very rapidly.:o

soma

finnpark wrote:

Eddie Hobbs is also covering it next Monday night.

Won't the programme be weeks/months out of date.? It's not live is it..? I just think sentiment has taken a bit of a battering especially since the first few weeks of sept.

SimpleSam06

redspider wrote:

It could be horrible, but only for a minority of people... 25% of the Irish economy is now tied up with property.

Just for comparison, the GDP of the United States had dropped by 31% during the great depression, before it started to turn around. Unemployment was at 23.6%, and 40% of banks closed...

D'Peoples Voice

Deleted User wrote:

i think alot of property outside of dublin and its large commuter zones peaked last spring

Someone I know is seeling their 3-bed semi-detached in Dublin 24, about a 10-15min walk from Tallaght hospital, the Sqaure, the luas,library, the school is not far away either etc. Anyway they had reached sale agreed in Late August, but the buyer has since pulled out.
Get this, the auctioneer/estate agent is now telling them that they won't get the same price if they try to re-sell, that the market has turned. This is from an estate agent who proclaim themselves to be one of irelands biggest.
Now if houses in well services areas of Dublin 24 are finding it hard to keep their value, what about Clonee in County Meath? Are their prices going to fall???
The house fell just under the Stamp duty bracket of EUR 381,000.

whizzbang

D'Peoples Voice wrote:

Someone I know is seeling their 3-bed semi-detached in Dublin 24, about a 10-15min walk from Tallaght hospital, the Sqaure, the luas,library, the school is not far away either etc. Anyway they had reached sale agreed in Late August, but the buyer has since pulled out.
Get this, the auctioneer/estate agent is now telling them that they won't get the same price if they try to re-sell, that the market has turned. This is from an estate agent who proclaim themselves to be one of irelands biggest.
Now if houses in well services areas of Dublin 24 are finding it hard to keep their value, what about Clonee in County Meath? Are their prices going to fall???
The house fell just under the Stamp duty bracket of EUR 381,000.

a lot of estate agents are explaining this as the property market is "correctng itself" this is the exact same term used during the first few weeks of the dot com bust in 2000!

the question is how big a decline is a correction? and how big is a crash?

Sponge Bob

FTB Activity is evaporating so if you are an FTB looking to buy in the next year then AIB have announced a €2000 cash bonus if you sign up with them

http://www.aib.ie/servlet/ContentServer?pagename=AIB_PressOffice/AIB_Press_Releas/aib_po_d_press_releases-0&cid=1141323113151&poSection=HP&poSubSection=null&position=first&rank=top

In an exclusive offer which will run until the end of the year, AIB is offering a EUR2,000 cash bonus to first time buyers who apply for an AIB mortgage and receive a letter of offer between 9th October 2006 and the end of the year. The mortgage must be drawn down before 31st December 2007.

Roy Was Right

I am astounded by this thread.
Never have so many hoped for so much despair.

All the predictions of doom are, as of yet baseless. But keep it up lads, if ye wish hard enough it might come true. And if it does then its a disturbing prospect for us all - homeowners or not.

It reminds me of desperate gambler who keeps saying " this race wiil be the one - I am due it". If you say the words crash and bubble often enough it will happen. Maybe not this month, next month or even next year... but then ( if it happens - something I am not at all convinced of) the smug post rationalisation will be unbareable.

Why do so many people here seem to be urging the " crash" on? Do you not realise the imapct on the economy? I assume most of ye have jobs. The effect of an asset crash will effect nearly sectors of indusrty.

As the saying goes.... Economists have predicted 7 out of the last 4 recessions. I think some people here have an equally as good record in predicting the housing " crash"

CiaranC

Sponge Bob, I can hardly believe my eyes reading that link. What next?

ionapaul

Some good points Roy, but many of us recognise that, despite the huge problems and pain that the bubble bursting will bring, in the long term (you know, for my children and your children and their children) Ireland NEEDS to get past this financial anomaly. It is a cancer that we have ignored for too long.

Yes, the chemotheraphy will nearly kill many of us