Housing bubble starting to pop?

CiaranC

Roy Was Right wrote:

Never have so many hoped for so much despair.

I know there are few here who earn buttons and think the world owes them a house at their particular price point, and that a crash is going to magically deliver this, but to be fair most people recognise what a disaster it would actually be.

A lot of people are just interested in the topic.

ionapaul wrote:

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.

Funny that most people that think Ireland needs a crash wont be the ones most drastically affected by it

Roy Was Right

Roy Was Right wrote:

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"

yes a crash will destroy the economy and there is plenty of HARD EVIDENCE to support the case for a crash. you said careful what you wish for - I certainly do not wish a continuation (impossible) of what has been going on i.e. a generation being robbed continuously each month for 30 - 40 years

there are always people who believe a crash would be in their interest
yes people have been tried to predict a crash several times the past few years but this one has happened already the ball is rolling.

And the average couple should be able to afford an average house - it makes sense

how are you "astounded" !!!!!!!!

seriously - the census figures on empty houses and 92,000 houses due to be completed this year!
and people have been told all along that the prices have gone up because of a SHORTAGE - its because of PURE GREED a quick buck - thats gonna RUIN the economy
it should have ended a long time ago then it wouldnt have had the impact its going to have

the madness of it all

ronbyrne2005

Roy Was Right wrote:

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"

oh get over yourself.

Sponge Bob

Roy Was Right wrote:

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.

God that was long winded Roy, the simple answer is

"Every Bubble Bursts"

OK with that ??

shoegirl

redspider wrote:

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.

I have to agree here. But from what I can see the big problem right now is that any potential FTBs who were in a position to buy have already bought. What this is leaving is a vast army of people on "average" to low incomes who cannot even consider buying, even on a combined wage, and also a load of people with impaired credit who could afford to buy, but won't get a mortgage (there seems to be dozens of these every day on boards and AAM).

The thing is - I know a lot of you pundits will turn around and say - but aren't these people the tenants who will make rented property profitable for others? No, because somebody who cannot afford a 1000 a month mortgage simply isn't going to be able to afford the 1200 a month in rent that the landlord is likely to demand for his property. The guy who takes home under 2000 euros a month isn't going to be renting your apartment for 800 euros - he's going to be looking for a room for 300-450 a month. This is driving the rented market down as "posh" tenants are few and far between - most of that potential group have already bought houses themselves!

Secondly also, and this is a point sometimes made but rarely with vigour. The runaway property market, consumer spending and SSIAs etc have masked the turndown in the industial sector, where something like 30,000 jobs have vanished since 2000 - are more are likely to disappear. I'd see this as hitting outside Dublin more aggressively, as Dublin lost its industrial base in the 70s and 80s. Places like Cork, Shannon and Clonmel are in for a rude awakening.

The reason I think the market is stalling is that prices have hit a threshold of unaffordability for the majority of potential FTBs. What it might do is keep prices steady for a year or two, but the very fact that there are ads in the Evening Herald every night looking to buy off hard-to-let properties is a sign of things to come.

Gurgle

Sponge Bob wrote:

"Every Bubble Bursts"

Balloons, on the other hand, can hold their shape indefinitely or deflate slowly.

Heres a prediction for ya:

House prices will continue to rise for the next few years, then slow down and in some places decrease a bit, though probably not as far as today's prices.

All the doom & gloomers in the last 918 posts will immedietly say 'see, told you so'.:rolleyes:

Shane™

Gurgle wrote:

Heres a prediction for ya:

House prices will continue to rise for the next few years, then slow down and in some places decrease a bit, though probably not as far as today's prices.

I think this post was true a few years ago, it has risen and is currently in a slow down, you might argue this won't result in a crash - but it is a slow down

conor_mc

Roy Was Right wrote:

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.

To quote a regular askaboutmoney contributor...

"You're right, I wouldn't wish a speculative property bubble on anyone!".

This is the nub of it, that the bulls just don't get. The crash isn't the problem, it's the bubble that's the problem. Without it, there'd be no crash on the horizon (for which there are masses of indicators...!) and there'd be 20/25-year mortgages instead of 35/40-year mortgages. There'd be plenty of housing for everyone (soft rental market indicates sufficient housing stock, just imbalance in the ownership of that stock due to speculation). Average house price would be 5/6 times the average wage, not 10/12 times it.

Falling national exports would be a cause of concern, discussed and debated by our public representatives, who might try something to spur some growth in this essential sector, instead it's glossed over because of headline figures of "6% growth" where that growth is in the construction bubble and not where the rudimentary health of an economy is based - it's balance of trade with the outside world.

20% of our workforce are employed in sectors associated with construction - is that healthy? Yet without contruction-fuelled wage inflation and its erosion of competitiveness, perhaps these people could have been employed in a manufacturing sector that actually exports real things, real items, bringing real money into the economy instead of credit, credit and more credit.

Gurgle

Shane&#8482 wrote:

I think this post was true a few years ago, it has risen and is currently in a slow down, you might argue this won't result in a crash - but it is a slow down

A crash is something that happens at speed.
Slowing down avoids a crash.

*wanders off to motoring forum

mox54

this topic has been going on for some time now and still the economy is racing forward - we have years of development still ahead of us before we even begin to compete properly with the UK, France, Germany etc etc, even Spain is years ahead of us so I wouldn't worry too much because once the housing market goes we still have roads, factories, roundabouts and on and on.....it'll be grand:D ...stop talking us into recession and doom and gloom, enjoy it while we have it.

:cool:

whizzbang

mox54 wrote:

this topic has been going on for some time now and still the economy is racing forward - we have years of development still ahead of us before we even begin to compete properly with the UK, France, Germany etc etc, even Spain is years ahead of us so I wouldn't worry too much because once the housing market goes we still have roads, factories, roundabouts and on and on.....it'll be grand:D ...stop talking us into recession and doom and gloom, enjoy it while we have it.

:cool:

Have we not prices outselves out of the manufacturing market with wage inflation? So I'm not sure there will be that many factories to build.

miju

Gurgle wrote:

Heres a prediction for ya:

House prices will continue to rise for the next few years, then slow down and in some places decrease a bit, though probably not as far as today's prices.

would you care to perhaps expand on your reasoning for this prediction with a rational well based argument or is it just a case of you wishing that will be the case?

Sponge Bob

miju wrote:

would you care to perhaps expand on your reasoning for this prediction with a rational well based argument

LOL

Here is one.

The IT property supplement, no less, has a breakdown on page 8 re: the 9 out of 96 properties that actually sold at auction this week ( and the 15 of 96 that allegedly sold afterwards.....allegedly) .

If you look at the small article on the top right of that page which is an unattributed commentary on the week you will notice strange language used by the peoperty journos about the prices set by the auctioneers generally .

The auctioneering industry, according to the IT, is apparently showing "delusional behaviour " at present. And there was me thinking it was only the public and the banks who were delusional while the auctioneers were ratoinally setting them ever higher price targets .

Its so strange being on a conveyor belt when it judders to a halt !!

soma

Gurgle wrote:

A crash is something that happens at speed.
Slowing down avoids a crash.

*wanders off to motoring forum

Utter tosh, would you tell the japanese that they didnt have a property crash cos their house prices fell for 15 years..?

Assets like houses are 'sticky' on the way down due to the length of time involved in transactions, plus emotional attachment will always cause plenty of people to ship huge carrying costs (e.g. the imbeciles "topping up their pension" by subsiding their tenants' rent) until they eat them alive.

soma

D'Peoples Voice wrote:

Someone I know is seeling their 3-bed semi-detached in Dublin 24
..
..
..
The house fell just under the Stamp duty bracket of EUR 381,000.

In many years, when the story of this rampant asset speculation (that's ALL it is people, be it tulips or houses) is written, it will all seem so simple to people to spot the irrational exuberance.

Look at the ludicruous situation depicted above. A house in tallaght (and I'm from West Dublin myself) has been reduced to what is essentially half a million US Dollars.

If anyone can put their hand on their heart & say that a house in one of the worst suburbs can command that kind of money - then you are officially stark raving mad.

conor_mc

mox54 wrote:

this topic has been going on for some time now and still the economy is racing forward - we have years of development still ahead of us before we even begin to compete properly with the UK, France, Germany etc etc, even Spain is years ahead of us so I wouldn't worry too much because once the housing market goes we still have roads, factories, roundabouts and on and on.....it'll be grand:D ...stop talking us into recession and doom and gloom, enjoy it while we have it.

:cool:

The economy is not racing ahead - construction and construction-related activity is racing ahead, creating nice comfort-blanket headlines about 6% growth etc.

But the reality is that the rest of the economy, the part that actually sells stuff to people other than ourselves, is on the brink of recession.

Go look at the balance of trade if you don't believe me and tell me which way it's going.... cos it sure as heck ain't heading north at a rate of knots!

conor_mc

soma wrote:

Utter tosh, would you tell the japanese that they didnt have a property crash cos their house prices fell for 15 years..?

Assets like houses are 'sticky' on the way down due to the length of time involved in transactions, plus emotional attachment will always cause plenty of people to ship huge carrying costs (e.g. the imbeciles "topping up their pension" by subsiding their tenants' rent) until they eat them alive.

In fairness, I think Gurgle was probably referring to halt in nominal house prices, thus allowing inflation to eat away at the over-pricing over a number of years.... that's my opinion on what a slowdown is anyway, even though I can't see it happening like that.

Japan was an out-and-out crash for 15 years.... as in falling property prices almost the whole time.

SimpleSam06

mox54 wrote:

once the housing market goes we still have roads, factories, roundabouts and on and on.....it'll be grand:D ...stop talking us into recession and doom and gloom, enjoy it while we have it.

Have you seen the roads lately? And even that much was done with handouts from the EU. Most of those factories aren't ours, they are owned by multinationals, who can and will hit the road whenever it suits them. As for enjoying it while we have it, we don't have it. We mortgaged it out for the next 35 years. In 35 years we will have it, assuming something else doesn't come along in the meantime to cause further damage.

Now you are right in that its not all doom and gloom, the medical equipment industries are investing more in Ireland, not less, and we have a young and vigorous population with more than half a brain in their heads. Mid term, the outlook isn't too bad, if we can get some decent management in the place to further indigenous industries and put taxes into infrastructure, instead of a nigh on useless civil service.

That, however, is the big if. What politician has the vision and clarity of thought to achieve that? We're stuck with the hangover of king Haughey's cronies and their lackeys forming the next wave. Bah.

soma wrote:

A house in tallaght (and I'm from West Dublin myself) has been reduced to what is essentially half a million US Dollars.

If anyone can put their hand on their heart & say that a house in one of the worst suburbs can command that kind of money - then you are officially stark raving mad.

Nyahahahah, I may make that my new signature. Succinctly put, sir.

mox54

mox54 wrote:

we have years of development still ahead of us before we even begin to compete properly with the UK, France, Germany etc etc, even Spain is years ahead of us so I wouldn't worry too much

:cool:

EXCUSE ME??

Did I read that correctly??

HUH!

Why is that a good thing?? surely what YOU state is a bad bad thing being "years" behind other countries?
what r ya like:eek:

Idleater

soma wrote:

Look at the ludicruous situation depicted above. A house in tallaght (and I'm from West Dublin myself) has been reduced to what is essentially half a million US Dollars.

Wowzers :eek: :eek: :eek: jeez, what a point. How did no one ever think about it that way. :eek: :eek: :eek:

Wait for it....

€381,000 is 737,718,870 old Italian Lira.

or, how about 1,163,112,990 Columbian Peso's

L.

daveirl

This post has been deleted.

soma

nereid wrote:

Wowzers :eek: :eek: :eek: jeez, what a point. How did no one ever think about it that way. :eek: :eek: :eek:

Wait for it....

€381,000 is 737,718,870 old Italian Lira.

or, how about 1,163,112,990 Columbian Peso's

L.

Nereid, I understand that the concept may be a little difficult for you to understand (as the average Irish person's financial literacy is nothing short of appalling), but the US Dollar (for better or worse) is still regarded as the world's reserve currency. Strangely enough, neither the extinct Lira nor columbian peso are in the same league.

Now whether the USD should be the regarded in this way, is another matter entirely.

jank

Nereid, I understand that the concept may be a little difficult for you to understand

I think the term used is "Give an idoit a calculator..."

Idleater

daveirl wrote:

This post has been deleted.

Erm, no offence ladies and gents, but the fact is that there have been people here stating that the US property market is in recession.

If it is so then stating what you can get for "almost half a million US$" is about as pointless as saying what you can get for €381000. I have been over in the states recently and what you get is directly comparable to here - location:sq footage etc.

It is your sad little minds that cant take a bit of a joke, because I would be willing to wager you half of that stack of pesos that I would be able to buy an even better residence for half that amount of pesos in Columbia than you could even think about buying here or in the states.

Face it, what I pointed out was just that somebody was calling an apple an orange. Just because I changed the apple to a grape doesn't mean it is wrong.

And, yes I had fun using Calc and XE Currency Converter thank you very much, but doing so does not make me an idiot.

L

Blackjack

jank wrote:

I think the term used is "Give an idoit a calculator..."

whats an idoit?.

In all honest, I think nereid has a point - you can dress it up as you like - making it a half million dollars, a number of Columbian pesos (or if you really want to make it a big number try Indonesian Rupiah) but 381,000 euros is a shed load of cash, in any currency equivalent.

Shane™

nereid wrote:

If it is so then stating what you can get for "almost half a million US$" is about as pointless as saying what you can get for €381000. I have been over in the states recently and what you get is directly comparable to here - location:sq footage etc.
L

I was in the states last week and what you get is certainly not comparable to what you get here, this is typical of what I seen. Notice the sq footage 2,512, location is good too (I stayed in that area, it's nice).

I also think half a million dollors is a lot of money, when I asked the Americans I was working with they agreed, I told them what you could get here for it and they just thought I was exaggerating, they just didn't believe me.

I went looking at a few places around the world, here are a few I found.
Mannhattan (that's in New York)
Germany
Germany (again)
Tuscany, Italy
France
London, England
Kent, England
Tallaght, Ireland
Crumlin, Ireland

Don't tell me our house prices are normal as all of those properties are priced at €381k, that's £256k and $480k on xe.com as I post.

Gurgle

miju wrote:

would you care to perhaps expand on your reasoning for this prediction with a rational well based argument or is it just a case of you wishing that will be the case?

So to predict that what has happened will continue to happen and then ease off requires justification.

While to predict doomsday based on nothing but wishfull thinking is ok.

Besides, why should I be the only one to justify my predictions?
Have you got anything to back up yours?

Gurgle

soma wrote:

Utter tosh, would you tell the japanese that they didnt have a property crash cos their house prices fell for 15 years..?

They demonstrated the problems inherent in 1000% finance.

They were using housing equity as a deposit for a loan - if you owned a house worth €100,000 you could borrow €1,000,000.

faceman

Dudes ive been offline for a week but ive decided to withdraw from future posts as the debating is still going round in circles and time will tell as they say. I still dont see a crash on the market.

BUT in a shock twist of opinion, i have to say im a bit surprised at some of the ECB comments yesterday in relation to interest rates. Despite a drop in inflation and a drop in oil prices they are still indicating further hikes this year. Even some of the more respected economists (see yesterday's Times) are baffled at their language. It makes no sense and with that level of unpredictability is not good for any economy. (Some of you may also remember the IMF comments a few weeks back warning the ECB of their rate decisions)

Anyway to my adversaries of late, spongebob, simplesam, pa elgrande, miji to name but a few heres hopin that no matter what happens it doesnt lead to a doom and gloom situation for all.

A further debate in a pub would be a nice progression from this forum but i will leave that with you!

Best of luck ppl and less wishing for doom!