Housing bubble starting to pop?

Sponge Bob

But austin knew all along about the build rate being c 90k or 100k very early on this year and did not think it was a factor then.

http://www.daft.ie/report/austin-hughes.daft

Love that URL

Signs of strong and rising house price inflation in the face of another record year for house building underscores just how strong the demand for property is in Ireland. In general terms, this reflects the health of the economy but there are a couple of important factors at work that have ensured the housing market remains notably stronger than most than most other economic sectors.

Ireland's population profile remains particularly supportive. Numbers in the key 25-34 age grouping are increasing at almost 5 per cent per year. This is in stark contrast to other Euro area countries where numbers in the key household formation age groups are growing by around a quarter of a percent. The recent surge in immigration suggests this divergence will remain a uniquely favourable support for the Irish housing market in coming years. The exceptional trend in demand should also be seen in the context of a still relatively low housing stock in Ireland. The number of dwellings per 1,000 inhabitants at 404 is now 30 below the European average.

So from a position of stonking demand and not enough houses in March 2006 we now have oversupply sez Austin.

Why should anybody pay any attention to the man ??

D'Peoples Voice

Sponge Bob wrote:

So from a position of stonking demand and not enough houses in March 2006 we now have oversupply sez Austin. ??

Sponge bob,
Read that piece that report again, and count the number of times he talked about affordability amongst young couples and rental yields.
Austin clearly thinks that anyone can buy a house, saying that our populaiton is growing and the number of immgration are increasing is one thing, but saying they have the finances to add to the demand for a new house is another thing.
Also saying that interest rates have peaked is one thing for investors, but comparing those same interest rates that with low rental yields at a time when capital appreciation is flat is another thing.
When houses were being sold off the plans across the country, we were told demand for houses is soaring, but when houses are taking longer to sell.....Austin still thinks demand for housing is very strong! :rolleyes:

Sponge Bob

Austin sure can talk

Demand was so strong between April 2002 and April 2006 (census dates) that 100,000 homes were bought for capital appreciation/tax breaks or both and simply left empty , see.



Assuming that these are worth an average of €200k each we have €20bn of housing sitting there surplus to immediate requirements. Phew

Now that capital appreciation has stopped they _may_ be put to better uses.

The minimum oversupply in the national market as I see it is those 100,000 units . This oversupply is most marked on the western seaboard and in the north midlands/shannon basin where the empties are 20% or more of the total stock. They are the areas most at risk of a downturn.

SimpleSam06

CiaranC wrote:

Lots of people have been bemoaning the fact that banks are lending way over 4.5x total income.

And why do people think €60k is a lot of money? Two people earning equal amounts on €60k between them would both be under the average industrial wage. Its almost as if the economic boom never happened for some people.

60k is a lot of money for more than half the population, and if more than half the population can't afford to live in their own houses, your economy is thoroughly borked. Take a look at France if you want to see what proper housing prices in a first world economy look like. Possibly Germany also, but I don't know a great deal about them.

Something else that almost everyone seems to miss out on is that two people earning between them 60k per annum AREN'T earning 60k per annum. They are pulling down 40k or so after taxes. Mortgage repayments were worked out before in this thread, but the upshot of that is that at the end of the day they have about €400 a week to live on between them, before factoring in childcare (since both parents are working), commuting costs, food and electricity, all the rest of it. And thats on current interest rates.

The banks are loaning irresponsibly, and its the rest of the population thats going to be hit when the house of cards falls down.

D'Peoples Voice

Ptsb/ESRI seurvey

new house prices fell by 0.4pc in October 2006

http://www.businessworld.ie/rankednews2.htm?s=index.html;s2=rankednews2.htm;r=3;a=1571838

Average house prices in October are growing at an annualised rate of 7.44% in October, down from 15.39% annualised in April.
Who is to say it won't be 1% annualised by the time the December report is issued at the end of Janaury?

gurramok

D'Peoples Voice wrote:

Ptsb/ESRI seurvey

http://www.businessworld.ie/rankednews2.htm?s=index.html;s2=rankednews2.htm;r=3;a=1571838

Average house prices in October are growing at an annualised rate of 7.44% in October, down from 15.39% annualised in April.
Who is to say it won't be 1% annualised by the time the December report is issued at the end of Janaury?

Remember, those stats are for mortgages drawn down and not sale agreed times.
That report is really reporting on August prices due to time lag of above

mad m

Just something I havent seen mentioned,I have noticed on one EA website that some houses look like they are up for sale but when you click in on them a little notice beside price stating *Withdrawn*.

D'Peoples Voice

http://www.businessworld.ie/livenews.htm?a=1574846;s=rollingnews.htm

IIB: Stamp Duty cut would up house costs

Austin Hughes, chief economist with IIB Bank, said that abolishing stamp duty could have the effect of pushing up house prices.
However, IIB Bank's Austin Hughes says this could actually push up house prices as buyers would probably use the money saved to pay more for the house in the first place.

"Unless there is a greater supply of housing, the likelihood is that they will bid against each other and the price of houses will increase," he says.

http://www.businessworld.ie/livenews.htm?a=1574846;s=rollingnews.htm
Has Austin being reading this post? That's what we have been saying for weeks! Well as John Maynard Kenes said in the 1940s, if I find I'm wrong, I change my mind, what do you do?
Maybe now others in the industry will see that a reduction in stamp duty will crucify first time buyers in the medium to long term.

Sponge Bob

Dunno about that, Stamp duty is only either 0% or 3% for the FTB and will make feck all difference if it is put onto the house prices . If house prices are essentially static now (month to month) and even if there is a 3% spike as the sellers take the money off the FTB themsleves , thats less than the rate of inflation nowadays .

It will make feck all difference TBH save where the natural market price FTB property is around €325k-340k it will remove downward pressure towards the €317k mark below which FTB stamp duty rate is 0%

It may cause DOWNWARD pressure because there is no incentive for the FTB to buy a NEW €350k property where there is no stamp duty as against asecond hand one where there is 3% stamp duty thereby producing a spike of unlettable SH properties onto the market hoping to cash in .

If Cowan wants to be noticed he should flat rate stamp duty for all PPR transactions whether new or second hand at 2% up to €1m and charge flat rate 9% thereafter ...I think thats what the rate is over €1m now so leave it.

Then he should maybe give the FTB a bigger tax allowance , €10k at the base rate or so .

DonalMcTavish

SimpleSam06 wrote:

Something else that almost everyone seems to miss out on is that two people earning between them 60k per annum AREN'T earning 60k per annum. They are pulling down 40k or so after taxes.

Actually they pull down over 51K after tax (before mortgage interest relief of about €1600 ).

Thats over €4200 a month between them.

D'Peoples Voice

D'Peoples Voice wrote:

Personally I can see banks repeat what they did a few years ago, and that was to reduce the loan to value rates they are willing to give loans to, so instead og giving 100% mortgages they may move to 80%.

today Wednesday, December 6th, just as night follows day, we learn

Big lender cuts back on 100pc mortgages

http://www.businessworld.ie/livenews.htm?a=1579850

One of the country's major mortgage lenders has cut back sharply on its granting of 100pc home loans.

EBS Building Society says it will now only offer such loans to limited categories of borrowers such as civil servants and professionals, such as doctors.

whizzbang

D'Peoples Voice wrote:

today Wednesday, December 6th, just as night follows day, we learn

and this is why will will not have a recovery in the spring!

its all about the control of the money supply...

no hope of "recovery" in the spring but maybe the real "recovery" is normalised house prices

Sponge Bob

whizzbang wrote:

its all about the control of the money supply...

Control the money supply or control the supply of property for sale. Nobody seems to be doing the latter ?? . Look at this graph here

Supercell

Sponge Bob wrote:

Control the money supply or control the supply of property for sale. Nobody seems to be doing the latter ?? . Look at this graph here

Jebus, didn't realise the inventory buildup was so high - since August nationally according to to Daftwatch there is twice as many properties for sale??, surely this cannot be right?

Twice as many properties for sale with ever increasing interest rates..surely this can only go one way ?

Longfield

Longfield wrote:

Jebus, didn't realise the inventory buildup was so high - since August nationally according to to Daftwatch there is twice as many properties for sale??, surely this cannot be right?

Yes it is correct,

also:
http://www.thepropertypin.com/forum/

above forum was started after askaboutmoney.com banned people from talking negatively about house prices

and this website lists actual houses that have dropped their asking price:

http://irishhousepricesfalling.blogspot.com/

its possible to track web pages as they were in the past using google cache
i.e if a house was for sale a few months ago you can see it online AS IT WAS those months ago. You can then compare it with how it is online today - and see the differences - i.e asking price
its not sensationalist its happening its a fact

oh and this is funny:
http://www.thepropertypin.com/forum/viewtopic.php?t=321
and this is related: http://www.neighbours.ie/belfry/showthread.php?t=60

^ basically people on neighbours.ie are getting windy about house prices and decide to ban the discussion

SimpleSam06

DonalMcTavish wrote:

Actually they pull down over 51K after tax (before mortgage interest relief of about €1600 ).

Thats over €4200 a month between them.

Donnie your Polishness is coming more and more into question; I'm reporting you to the mods for being a shill, and I suggest everyone else that cares about honest debate does too. If you're a real estate agent, as you almost certainly are, just come out and say it, you'll get a lot more respect than pretending to be one of a fictional immigrant minority aching after Irish real estate.

Deleted User wrote:

above forum was started after askaboutmoney.com banned people from talking negatively about house prices

Excellent find Blindjustice, I'll be reading that with relish. The closing of the AAM thread was a disgrace by anyone's standards. Or at the very least it displayed a stunning ignorance on the part of the admins on how to run a website.

Southeast Asia was great, I'd advise anyone without a mortgage to try it.

SimpleSam06

DonalMcTavish wrote:

Thats over €4200 a month between them.

Just a thought here Donnie, I don't know if you or any of the other real estate agents have had this one asked of you yet, but basically what you are all saying is that we should abandon the old paradigm of 3x or 4x single income as a reasonable guide price for housing, and instead apply that to couples.

By that reasoning, should we in fact be looking at the stock of houses as being double what it actually is? I mean the number of houses available for purchase is predicated as a percentage of total stock based upon the number of individual people who will buy them. Doesn't that mean that if only couples can buy, the amount of housing stock is effectively doubled, with regard to the number of people who are able to buy?

SimpleSam06

And just to pour a little more acidic scorn upon the balding beaurocrats running AAM, (no disrespect to balding beaurocrats anywhere else mind you ) from their recent policy decision...

Folks

We have banned the discussion of house prices movements for the moment on Askaboutmoney. This applies to those who assume prices are going to rise as well as those who assume that they are going to fall.

Brendan

Good lad Brendan. And yet...

What precisely is inaccurate about Ravima's post above in your opinion?

Its still kosher to discuss prices going up after Cowen's stamp duty decision. What a bad, sad, flappy joke.

whizzbang

Longfield wrote:

Jebus, didn't realise the inventory buildup was so high - since August nationally according to to Daftwatch there is twice as many properties for sale??, surely this cannot be right?

Twice as many properties for sale with ever increasing interest rates..surely this can only go one way ?

yep, those figures are rea, I started recording them in July then handed them over to NoNotPassGo when he started his web site.

either there is loads of inventory or daft is doing very very very well

simple sam - ask about money closed the discussion and banned talk about property prices shortly after an annual general meeting. Now bear in mind also that askaboutmoney also started to accept donations around the same time: in THEIR words: By popular demand, Askaboutmoney is now accepting donations

http://www.askaboutmoney.com/announcement.php?f=2&a=28
some posters think I am being too cynical about the possibility of a link.
Oh and loads of posts were being deleted silently through the thread - I saved a hard copy of it and was trawling through it and noticed it didnt match the online copy!

whizzbang

whizzbang wrote:

either there is loads of inventory or daft is doing very very very well

myhome does seem to be losing business to daft! but does anyone have figures for last year to compare?


oh and have ye all heard about paddypower and the betting on house price growth for next year.

The odds are even on it being less then 3%.

Plissken1

Don't worry the Gov will make sure that the housing boom continues, I mean they have to, our entire economy depends on it. Its a house of cards that they must keep up, somehow. Better get the glue out !!

D'Peoples Voice

faceman wrote:

The other reason that i feel there is no crash on the cards is this year's budget. ....I expect that they will avoid dis-incentivising investors and relaxing stamp duty some more (or increasing mortgage interest relief) for FTB's.

The fact that existing FTBs now receive substantially higher mortgage interest relief than other buyers, will this create a disincentive for FTBs to trade up and lose a large part of that mortgage relief?

With properties being difficult to shift, and interest rates increasing, it makes it difficult for a lot of people to trade up. Adding to the fall off in investors from the market, FTBs may not have much competition in the house buying market next year!:rolleyes:

Plissken1

Plissken1 wrote:

Don't worry the Gov will make sure that the housing boom continues, I mean they have to, our entire economy depends on it. Its a house of cards that they must keep up, somehow. Better get the glue out !!

not a bit worried - I sold my house.



ps there is not enough glue to go around

DonalMcTavish

Was just sitting here looking out the window.
The house across the road has been for sale for 3 weeks. Not much action in the evenings i've been home.
But tonight there must have been at least 30 people in 2 groups who went in.

Do-more

Ah the EA's must be rushed off their poor little feet today now that the uncertainty of the budget has been put to bed!!!:D

Was passing Bertie's local today and the two lads staffing Lisney's across the way were standing in the window looking out, with their hands in their pockets, just taking a short break from the mad rush I'm sure;)

Blackjack

DonalMcTavish wrote:

Was just sitting here looking out the window.
The house across the road has been for sale for 3 weeks. Not much action in the evenings i've been home.
But tonight there must have been at least 30 people in 2 groups who went in.

30 People in 2 groups - do you mean 2 groups of 15 people?. Sounds like someone's having a party.;)

are they still in there???

SimpleSam06

Deleted User wrote:

Oh and loads of posts were being deleted silently through the thread - I saved a hard copy of it and was trawling through it and noticed it didnt match the online copy!

Wut. How many rain forests died to archive that monster?