House Price Boom Over - Evening Herald Front Page today

thejuggler

Todays Evening Herald headline reads 'House boom over'

So finally the media has cottoned on to what the enlghtened few have known for months. The property boom is over and house prices are about to nosedive.

Idleater

thejuggler wrote:

Todays Evening Herald headline reads 'House boom over'

So finally the media has cottoned on to what the enlghtened few have known for months. The property boom is over and house prices are about to nosedive.

Really, so the housing boom is over as of ................ NOW! no wait, was it over when the article was printed, or when the article was written, when it was thought up of or when you read it.

I haven't read it, nor do I read the Herald so does that mean the boom is over for me too?

Never mind that, since when has the Evening Herald been the "media" that has finally cottened on? I have heard articles about this on Morning Ireland for months.

And, since you are doing so well at predicting the future, why stop there. Why not tell us all when the bust will stop.

Well, Im off now to see if the landlord has put a for sale sign on the door...

L.

Raiser

nereid wrote:

Really, so the housing boom is over as of ................ NOW! no wait, was it over when the article was printed, or when the article was written, when it was thought up of or when you read it.

I haven't read it, nor do I read the Herald so does that mean the boom is over for me too?

Never mind that, since when has the Evening Herald been the "media" that has finally cottened on? I have heard articles about this on Morning Ireland for months.

And, since you are doing so well at predicting the future, why stop there. Why not tell us all when the bust will stop.

Well, Im off now to see if the landlord has put a for sale sign on the door...

L.

Love the post - must nominate for post of the day

Whatever sells newspapers is whats going to be splayed across the front of Da Heraldo methinks.......

stepbar

Christ I read that in the Sunday Indo, less the "the world is going to end crap" that the Herald usually comes out with. Seems the Herald are way behind on this one even though it is a sister paper of sorts.

secret_squirrel

stepbar wrote:

is a sister paper of sorts.

The bastard sister no-one mentions...

godtabh

One expert says its gona crash one says its gona rise.

There are experts that will argue each point but only time will tell.

I'm no expert but I reckon things will level out. Some of the developments that are a good bit away from the major cities might struggle but in general it things will level out I reckon

DublinWriter

It must be true if it was in the Herald!

The_Conductor

The guts of the article are that of the 49 auctions so far this month in Dublin- only 7 resulted in a sale (and a further 2 were sold for undisclosed sums after failing to sell at auction). Further a 6 bed on the South Circular which was withdrawn from auction in June at 1.2m is now back on the market at 1.0m and average house prices in North Wicklow/South Dublin have now fallen 10% on prices achieved this time last year.

They did quote some statistics- one in particular is a first time buyer who this time last year qualified for a loan of 334k, with the 1% rise in interest rates since then, now only qualifies for 296k with further increases on the immediate horizon (a drop of almost 40k in borrowing capacity). Further dwelling completions for 2006 are now estimated to exceed 103,000 (another first) just when the economy is slowing, unemployment is beginning to tick in the wrong direction, interest rates are rising and everyone is up to their necks in debt........

While I question the reporting in that particular journal, along with their sensationalist approach to headlines- it does sell papers, and ultimately their information is broadly a rehash of what Austin Hughes (IIB) and other economists are all bleating.

We do have a situation of the boy who cried wolf- but that does not mean the wolf is not now at the door.......

Sleipnir

thejuggler wrote:

Todays Evening Herald headline reads 'House boom over'

So finally the media has cottoned on to what the enlghtened few have known for months. The property boom is over and house prices are about to nosedive.

I can't believe there are people out there who read The Herald and then form an opinion based on what they have just read.
How depressing......

EKRIUQ

nereid wrote:

Really, so the housing boom is over as of ................ NOW! no wait, was it over when the article was printed, or when the article was written, when it was thought up of or when you read it.

I haven't read it, nor do I read the Herald so does that mean the boom is over for me too?

Never mind that, since when has the Evening Herald been the "media" that has finally cottened on? I have heard articles about this on Morning Ireland for months.

And, since you are doing so well at predicting the future, why stop there. Why not tell us all when the bust will stop.

Well, Im off now to see if the landlord has put a for sale sign on the door...

L.

LoL, Loving your style:D

DublinWriter

smccarrick wrote:

The guts of the article are that of the 49 auctions so far this month in Dublin- only 7 resulted in a sale

As Eamonn Dunphy would say, "Hold it dere".

The magic word is 'auction'. In the last year properties at auction have been withdrawn left right and centre for failing to meet the reserve.

Nothing new there. Estate agents are putting crazily low guide prices on auction property just to stimulate interest, so it's no breaking-news - the Sunday Business Post have been covering auctions and the high amount of withdrawls for the past 12 months.

Without sounding like a snob, I'd rather get my news from a newspaper that doesn't have a Horiscope section.

gurramok

Sleipnir wrote:

I can't believe there are people out there who read The Herald and then form an opinion based on what they have just read.
How depressing......

The reason why this headline is important despite herlald being a rag is that the average joe soap has seen that headline splashed on every street corner, every handler selling those papers in traffic this morning and the 'house boom over' topic is now mainstream and will affect sentiment in market.

imeddyhobbs

Last weeks headline on the herald "cold winter ahead"

hmmm

Over the Summer, the reason property wasn't selling was because it "wasn't the Autumn selling season"

Last week in the so called selling season the reason property wasn't selling was because of the Ryder cup

Today the reason property isn't selling is because of stamp duty changes in the budget

The bulls are running out of excuses, and the smart money is exiting at speed whilst it still can.

Gurgle

thejuggler wrote:

So finally the media has cottoned on to what the enlghtened few have known for months. The property boom is over and house prices are about to nosedive.

Woah, is this the old boom thats over or the new one that happened after the last crash 6 months ago that most of us didn't notice?

*economists have successfully predicted 11 of the last 3 recessions.

The boom is over when house prices actually come down, not when the Herald prints that they're going to.

hmmm wrote:

The bulls are running out of excuses, and the smart money is exiting at speed whilst it still can.

The bulls aren't in need of excuses, the house prices haven't crashed yet.

godtabh

Gurgle wrote:

*economists have successfully predicted 11 of the last 3 recessions.

Not being smart but how do you predict 11 of the last 3 recessions?

That doesnt make sense

squrm

kearnsr wrote:

Not being smart but how do you predict 11 of the last 3 recessions?

That doesnt make sense

I think the point Gurgle was trying to make is that economists are constantly predicting recession, thus they are bound to make the right prediction sometime

thejuggler

Scoff all you like but if you want statistical proof of multiple price drops which have happened already head on over to http://www.askaboutmoney.com//showthread.php?t=31710&page=238 and your eyes might be opened.

Of course you could keep your head in the sand if you like..........

Idleater

thejuggler wrote:

Of course you could keep your head in the sand if you like..........

No offence, but I think the general trend of the posts here are more saying that the sensationalist headline from the Herald are exactly that - sensationalist - designed to sell papers to the masses, whatever the content.

And if you think that people who do not read the herald are sticking their heads in the sand, there have been numerous articles on a weekly basis for months about the decline and possible decline in the property market in other newspapers and on the radio.

Also, if you had done a search on this website, you would have realised that there is another thread (in Business Economy and Finance) about the housing bubble.

Make a choice, do you want to discuss the article, the newspaper in which it was written or the general topic at hand?

imeddyhobbes wrote:

Last weeks headline on the herald "cold winter ahead"

classic!!! I had better root out the aul ski jacket too. Thanks for the reminder Evening Herald .

L.

rowan

Maybe the reason lots of houses weren't sold is because buyers are waiting for their ssia's to come through? If you were thinking of buying a house and had an ssia about to mature, wouldn't you wait?

Another factor might be that so many new apartments are on the market and people are going for the <125sq m floor area to avoid stamp duty

thejuggler

nereid wrote:

Make a choice, do you want to discuss the article, the newspaper in which it was written or the general topic at hand?

L.

The general topic naturally. The point I was trying to make was that this is the first time that the story has appeared on the front page of a newspaper that the average "man on the street" would see. Yes there have been numerous thinly veiled warnings over the last few months but there's also been a lot of counterspin from the vested interests (ie. the banks, auctioneers and the Irish Times (who after paying big bucks to purchase myhome.ie recently don't want the property market to go down the pan)
Its not that I give kudos to the Herald or anything I just believe that it can have an effect in changing public sentiment.

Paulw

I wonder what the reserve prices were on these houses? €750,000? €1m? Auction houses are generally well above the normal home starter.

If the very high end of the market is going to turn down, then that's not a bad thing.

I doubt the starting end of the market will decline any time in the near future.

seamus

There are going to be arguments about this long after we've all bought and sold twenty houses.

The boom ends when houses are no longer appreciating by tens of thousands of euro per year. This has already started happened. There are two fundamental pillars of a housing boom - demand and investor confidence. They are not mutually exclusive. Any drop off in a boom starts at the centre, at the big expensive houses. People buying these houses are buying to invest, or are buying because they already have a huge home, but want to move into an even bigger home to reap the benefits of price inflation. When demand for these homes drops off, or they start selling at or below the AMV, it's an indicator of a drop-off in investor confidence in the market.

This drop-off cascades slowly outwards, as each level of buyers slowly realises what those wealthier are saying - that moving house or buying another house may not reap the rewards it once did.

This eventually moves out to the first-time buyers. It could take years to reach the first time buyers. Up to this point, the market is still stable, prices are still rising overall, albeit slower.

Once the first-time buyers lose confidence in the market and decide to stay put, the market can go either way. If there are a lot of new homes on the market, and a lot of people wanting to trade up, the market is suddenly awash with property. Stability can still reign, if people are willing to hold onto what they have. However you're most likely to see the low-level investors panicking - people who bought a second mid-range house at or around the same price as their existing house, see every second house going on the market at the same time. As everyone tries to sell up, everyone tries to undercut eachother, and prices slump. This panicking would of course be driven feverishly by the likes of the Herald and the Indo.

On the other hand, if there is just enough new housing to satisfy the first-time buyers who will still buy, and everyone else is willing to hold out for the long-term, the boom can be brought down to a natural landing. Prices will still rise, but at sane levels.

I still think we're a few years yet from the possibility of a major crash (unless interest rates rise suddenly), but it's definitely cooling off.

As for people decreasing the price of their houses to get a sale - currently that's because they way overvalued them initially. I looked at two houses over the weekend, essentially indentical. One was asking for €15,000 more than the other, for no real reason other than they wanted to.

Noelie

Paulw wrote:

I wonder what the reserve prices were on these houses? €750,000? €1m? Auction houses are generally well above the normal home starter.

If the very high end of the market is going to turn down, then that's not a bad thing.

I doubt the starting end of the market will decline any time in the near future.

Thats what i think also, i was reading a Indo in my dads house over the weekend and it stated prices fell by 20% it went on to state a house initially asking 8.5 million was sold for 7.5 mil, i hardly think this effects the average home owner.

when they report that a 2 bed apartment requesting 400K is sold for 300K i'll say the bubble has burst.

The_Conductor

Noelie wrote:

when they report that a 2 bed apartment requesting 400K is sold for 300K i'll say the bubble has burst.

Nah....
There can be very little justification for a 2 bed apartment going for 300k- unless its in D4 or something- and that would only be a rollback of 18-20 months increases.
If (and when) the bubble bursts- slumps could very well be a hell of a lot more than most people are anticipating. Keep in mind property in some areas of London (and overseas in Tokyo for example) is now cheaper in monetary terms (rather than real terms, which are even more dramatic) than it was in 1989- 17 years ago......

Gurgle

thejuggler wrote:

if you want statistical proof of multiple price drops which have happened already head on over to http://www.askaboutmoney.com//showthread.php?t=31710&page=238

You're referring to an old boardsie thread, exactly the same as this one, as statistical proof?

As for multiple price drops, the house on that page was dropped by 5% because the owner/seller is panicking after reading a whole pile of sh`ite like the herald report and this thread.

The boom can (and probably will) end without a busting bubble and a crash in house prices. Of course the odd fool will put his money where your mouth is and throw away a few thousand by selling his house below value.

It used to be the rule rather than the exception that a house would sit on the market for months before selling - now you're seeing people panicking when that happens because they expect their house to be snapped up the same day they decide to sell it.

Noelie wrote:

when they report that a 2 bed apartment requesting 400K is sold for 300K i'll say the bubble has burst.

I'll say what kind of twit would pay 300k for a 2-bed apartment.

Thats a point actually - when they eventually build an infrastructure for public transport, Dublin house prices are going to take a hit and level off much closer to the prices 20 miles from O'Connel Street.

DaDa

Did I read or hear that someone stayed in their car for 9 days recently... queuing to be the first to buy a house ...in Limerick I think?

Noelie

smccarrick and Gurgle, you should really keep up with the cost of property in dublin, not only are people paying 300k+ for two bedroom apartments they are paying that for 1 bedroom apartment.
I'd say the average cost of a 2 bed apartment in dublin is now over 300K

The_Conductor

Noelie wrote:

smccarrick and Gurgle, you should really keep up with the cost of property in dublin, not only are people paying 300k+ for two bedroom apartments they are paying that for 1 bedroom apartment.
I'd say the average cost of a 2 bed apartment in dublin is now over 300K

I recognise what you are saying. My point was more that this is almost 9 times average Dublin salaries- when the max the banks are supposed to be lending is 6 times primary + 1.5 times secondary incomes (and not counting bonuses or any other non-definitive income).

I.e. affordability- people cannot afford to pay these prices..... They are still paying them nonetheless. Another few interest rate increases and the risk of property taking a dive and people being in negative equity positions increases exponentially.

Gurgle

Noelie wrote:

smccarrick and Gurgle, you should really keep up with the cost of property in dublin, not only are people paying 300k+ for two bedroom apartments they are paying that for 1 bedroom apartment.
I'd say the average cost of a 2 bed apartment in dublin is now over 300K

I am aware of the cost of property in Dublin.

My point is that 300k for a 2 bed apartment anywhere is silly and unsustainable but does not reflect the state of the rest of the housing market.

Ireland != Dublin

The prices in Dublin are higher than in the commuter belt because of the poor transport infrastructure. When (eventually) the infrastructure catches up with the economy, we are likely to see Dublin prices coming down to within 10% to 20% of the commuter belt prices for similar properties. This is not a crash or a bursting bubble its a predictable slow change in an economic situation.

hmmm

Gurgle wrote:

The prices in Dublin are higher than in the commuter belt because of the poor transport infrastructure. When (eventually) the infrastructure catches up with the economy, we are likely to see Dublin prices coming down to within 10% to 20% of the commuter belt prices for similar properties. This is not a crash or a bursting bubble its a predictable slow change in an economic situation.

This is just speculation, where are your hard figures to back up this belief?

People paying 9 times salary for so called "starter" homes assume that the price of their property will go up, and they will be able to sell and move to a "normal" property. Leaving aside the nonsensical reasoning behind this *, once the market sees that house prices can fall, there will be a sea change in attitudes to borrowing this amount only to throw your money away.


* If the price of your starter home goes up, so does the price of your target property.

Saint_Mel

I dont think that house prices will fall dramaticially until
well after all the SSIA's have matured and spent.

For a lot of people coming up with the deposit is the main stumbling block
but with the SSIA's theres the deposit straight off and once people can
afford the deposit I cant see prices falling.

(Just my own humble opinion for outside Dublin house prices)

the_batman

Saint_Mel wrote:

For a lot of people coming up with the deposit is the main stumbling block
but with the SSIA's theres the deposit straight off and once people can
afford the deposit I cant see prices falling.

With 100% Mortgages, does the deposit really matter any more?

Noelie

It still does, you normally get a lower amount of money with a 100% mortgage than with a 92%.

Afuera

Gurgle wrote:

It used to be the rule rather than the exception that a house would sit on the market for months before selling - now you're seeing people panicking when that happens because they expect their house to be snapped up the same day they decide to sell it.

This is exactly why it will crash. People's expectations are no longer in line with reality. Some will panic when the myth that property is a one-way bet is broken.

ambro25

hmmm wrote:

People paying 9 times salary for so called "starter" homes assume that the price of their property will go up, and they will be able to sell and move to a "normal" property. Leaving aside the nonsensical reasoning behind this * (etc)

* If the price of your starter home goes up, so does the price of your target property.

I'm sure many will be quick to post something to the effect that "Yea, hmmm, but by the time they wanta move 'up', their take-home pay will be 'up' as well so the fact that starter and normal properties both go up at the same time doesn't matter"

I'm not (I'm just making a pre-emptive strike against such posts, if you will ).

The fact of the matter is, bearing in mind the market dynamic as influenced by the number of sustainable multiples of take-home pay for borrowers, the higher the price range you're looking at, *very obviously* the bigger the multiple required to move 'up' : if your starter home is €250k and you're buying with a 9 x pay mortgage, you're going to want a very serious career boost to move up to a €450k home (still at 9 x, now with kids to clothe and feed).

Briefly, my point is that maybe the slump (if it is so) corresponds to a point of equilibrium having been reached : no more buyers' repayment capacity left in the market to sustain the previous rate of growth, therefore slow down.

Gurgle

hmmm wrote:

People paying 9 times salary for so called "starter" homes assume that the price of their property will go up.

Maybe they're afraid the price will go up and they'll lose the option of ever owning their own home at all.

People pay their annual salary for a car, are they convinced its value will go up?

The decision to buy a home should be based on:
Do I want to live here long term?
Will I pay the same or not much more to own this house than to rent it?
Can I expect to be able to pay the mortgage over its term, factoring in reasonably likely rises in interest rates?

Idleater

Gurgle wrote:

People pay their annual salary for a car, are they convinced its value will go up?

Not only that, but people buy cars knowing beforehand that they will lose a huge proportion the second they take the key, yet barely blink an eye.

I agree completely with your arguments pro home ownership. Investing/Buy To Let are a different kettle of fish.

If the repayments are managable, with allowances taken for increases in monthly cost, then the stability that a home provides can be worth a lot in terms of quality of life, time, and general wellbeing that cannot be quantified in real (monetary) terms.

L.

delly

My 2c's

Since and before I bought my first house in 2002 people have predicted a crash of some form or another. I was honestly worried about buying at the time but went ahead anyway. I really feel sorry for the FTB's who have held back on the idea that a crash was on the way and have now priced themselves out of certain areas on this basis.

I currently live in a very large estate with over 900 homes just south of Drogheda which takes 20 minutes to get to Dublin airport. I would be classed as the new commuter breed, but not by much when I hear how far other people travel to get to work in the city.

With such a large mix of apartments, semi-d's, detached 4 and 5 bedroom houses in my estate there is always a good supply of properties for sale, and I keep an eye on prices to determine my own house worth. The fact is these homes are still selling and are still maintaining the pricing patterns during the year. Things may slow slightly and have the 'soft landing' that is often talked about but I'm pretty sure there will be no hard crash of these types of houses aimed at FTB's and people trading up for there second home.

soundbyte

thejuggler wrote:

this is the first time that the story has appeared on the front page of a newspaper that the average "man on the street" would see. Yes there have been numerous thinly veiled warnings over the last few months

Emm ... was I the only one that read that story in the Sunday Trib at the weekend? (The borrowing calculations were lifted from the Sunday Business Post two or three weeks ago).

Am I the only one who has read countless front page stories in the Indo and Business Post about a downturn in the market?

ionapaul

I read numerous 'bubble gonna burst!' articles about the NASDAQ in 1997...1998...in 1999...in 2000.

They were all right in the end, there was a horrible bubble with regard high-tech stocks ignoring the fundamentals, in fact despite the horrific crash some are still over-valued!

Discussion right this second on the Last Word about whether or not the crash has finally started - whether it is happening now or in a year's time, don't doubt that a market can't ignore the fundamentals forever. The bubble ends when the amount of 'greater fools' dries up - still probably a good few of them around!

Gurgle

delly wrote:

Since and before I bought my first house in 2002 people have predicted a crash of some form or another. I was honestly worried about buying at the time but went ahead anyway.

Likewise, but for me it was in 1999.

I made the mistake of listening to the economists once:
In 2000, my 1 year discounted fixed rate term was up, and everyone was absolutely certain that interest rates would not stay as low as they had been. At the time, I think variable rate was 5.7%, and we allowed ourselves to be talked into fixing at 6.7% to protect ourselves against the near-certain impending increase.

Anyhow, we fixed for 2 years at 6.7% while the going variable rate dropped to 4.1%.

Doh!

Lesson learned.

Just 2 weeks ago, my mortgage company called me out of the blue to offer me a better deal on my mortgage.

When it actually came through it was 4.15%, down from 4.5% and pushing a hard-sell of the fixed rate at 5% because - guess what - the ECB is certain to increase rates again this year :rolleyes:

If they're trying to sell you something, its in their interests not yours.