Housing Bubble Bursting

DonJose

indiewindy wrote: »

Some leeway will be provided to them by the increased mortgage relief that was signalled at election time which should be available in January, a small help but a help

Do you really trust this government of ours? They promised to cut the higher rate of tax to 40%, little chance of that. The government cannot afford to bail out homeowners who purchased properties they could not afford.

"He said the Minister Cowen needed to curb spending 'quite dramatically' and may need to borrow a little or even raise taxes."

http://www.rte.ie/news/2007/1023/economy.html?rss

ambro25

DonJose wrote:

"He said the Minister Cowen needed to curb spending 'quite dramatically' and may need to borrow a little or even raise taxes."

http://www.rte.ie/news/2007/1023/economy.html?rss

Got quite a giggle out of that one

Mmm...decisions, decisions :rolleyes:

nesf

DonJose wrote: »

Do you really trust this government of ours? They promised to cut the higher rate of tax to 40%, little chance of that.

Actually, that Cowen isn't going to cut the higher rate is a good reason to trust him a little more when it comes to finances. Similarly with how he dealt with the stamp duty issue last year and how he minimised the impact on the exchequer.

DonJose

nesf wrote: »

Actually, that Cowen isn't going to cut the higher rate is a good reason to trust him a little more when it comes to finances.

Its not when you are paying the higher tax rate of 41% :mad:

nesf

DonJose wrote: »

Its not when you are paying the higher tax rate of 41% :mad:

I am paying that tax rate and I had no illusions about that tax cut materialising if there was a downturn in the economy.

Gurgle

ronbyrne2005 wrote:

Never thought i'd see "price reduced to sell" signs on homes in prime Dublin areas!

Thats the first (and possibly only) place I expected to see signs like that. Its the most overpriced property thats going to land hardest, and Dublin's prices are truly ridiculous compared to the rest of the country.

Glenbhoy

miju wrote: »

this would be one of the promises that Fianna Fail have already rowed back on. I'd be fairly certain that this will be another promise that will not materialise as FF make "prudent economic decisions to guide us through the downturn" (and yes a senior FF politician did say that )

I can't see them reneging on this, I think they should, but I can't see it - it's the only tool they have to try and keep the property market on an even keel.

Glenbhoy

Gurgle wrote: »

Thats the first (and possibly only) place I expected to see signs like that. Its the most overpriced property thats going to land hardest, and Dublin's prices are truly ridiculous compared to the rest of the country.

There are several such signs out in Crumlin - not prime location by any stretch.
Whilst you are right that the most overpriced property will land the hardest, I wouldn't neccessarily expect the most overpriced property to be in the prime areas, and I certainly don't think Dublin property will crash to the extent that property countrywide will.

miju

Glenbhoy wrote: »

I can't see them reneging on this, I think they should, but I can't see it - it's the only tool they have to try and keep the property market on an even keel.

I think that maybe given Berties very clear and unusually strong comments (for him) at the start of the week that FF are not going to try and prop up this slump too much and hope for a quick sharp one rather than a long drawn out thing.

Personally I've never voted for FF but if they actually do the right thing here and don't meddle with the market and let it correct naturally they'll have gained a new FF voter (shudder )

mathie

If FF do anything other than lower the rate to 40% then it's yet another broken promise.
M

miju

well prepare for another broken promise in the national interests of course

Glenbhoy

mathie wrote: »

If FF do anything other than lower the rate to 40% then it's yet another broken promise.
M

In fairness to them, they did say economic conditions permitting. They didn't add that caveat with regards mortgage interest relief afaik.
If Cowen had stuck to his guns re stamp duty (I know he couldn't as it was part of the deal struck with the Sindo), I'd have a lot more respect for FF, unfortunately he didn't.

Gurgle

Glenbhoy wrote: »

I wouldn't neccessarily expect the most overpriced property to be in the prime areas, and I certainly don't think Dublin property will crash to the extent that property countrywide will.

The true 'prime' areas will probably keep most of their their value; places like Dalkey, Killiney, Foxrock etc, where prices were over the €1m mark long before the boom.

Its the 'noveau' prime areas that are going to see losses, average houses in average areas of Dublin which have nothing much going for them but are priced at more than double the national average.

The average price paid for a house in Dublin was €410k in august (and thats all of Dublin, including the sub-sub-sub-prime locations where you have to show your firearms license to buy beer), compared to €257k outside Dublin. Dublin just isn't enough of a major metropolis to justify the difference.

I live 49km from O'Connell St, according to the AA website. With a 1st world light rail infrastructure that would be a 30 minute commute by train. With a 2nd world road network it would be about 45 minutes. Unfortunately we're stuck with 3rd world donkey tracks so its a 2 hour drive anytime except at 3am.

Mayo Exile

Originally posted by Maxwell: People bringing in packed lunches - alot of them now seem to be doing this.

A very sensible thing to do anyway. Remember its the small repeat items you buy that make the hole in your pocket. Not good for the sandwich roll makers, but they always blatantly overcharged for such products anyway. Eddie Hobbs showed you can save some 2k a year by avoiding these plus the similarly overpriced coffees, lattes etc.

SimpleSam06

ambro25 wrote: »

That's the worst. People not going out/consuming = seriously malfunctioning economy, and danger of turning a perceived downturn into a reality.

Very interesting. I wonder are there enough people in serious debt to actually affect the entire economy? While not exactly an unforseen consequence, it does go a lot further than the usual "construction industry will collapse" effect.

ambro25

SimpleSam06 wrote:

I wonder are there enough people in serious debt to actually affect the entire economy? While not exactly an unforseen consequence, it does go a lot further than the usual "construction industry will collapse" effect.

Given the concentration of population in Dublin relative to the total population size of Ireland, I'd say the disproportionate dynamics of the local property market would disproportionately affect the national economy: perhaps not that many people "close to the edge" on a national scale, but perhaps too many people "close to the edge" in the economic lung of the country...

And for that one, you can blame whoever's at the levers of infrastructural developments, because if transport/access improvement/development was following pace with building, then following the spirit of Gurgle's post, Dublin's hyper-center would remain readily accessible to people living within an ever-increasing radius therefrom (and therefore house pricing wouldn't skyrocket to the same extent, influenced by hyper-center proximity as it remains).

jmayo

SimpleSam06 wrote: »

Very interesting. I wonder are there enough people in serious debt to actually affect the entire economy? While not exactly an unforseen consequence, it does go a lot further than the usual "construction industry will collapse" effect.

It will be interesting to see the affect another increase in interest rate will have on consumer spending.

Regarding the 280,000 odd involved in construction, any sizeable drop in that number, with no take up from other sectors of economy, will have big affect on consumer spending, thus a knock on influence on jobs in retailing.

daveirl

This post has been deleted.

Colonel Sanders

daveirl wrote: »

This post has been deleted.

was it not in Cowen's budget speech last year that they'd cut the top rate to 40%. I assumed this was in 2007 but now that you say it I'm not sure if he actually said that (that it would happen in 07). As you point out they may use the 'we have 5 yrs to impliment this' card.

Personally I wouldn't trust a FF politician to guide me into an empty parking space.

miju

it was an election "promise" so they do have five years to do it. bit OT here but it's a classic fianna fail tactic. ramp up the ever loving fook in public spending then post election "everyone tighten their belts" then just in time for next election they ramp it up like crazy again.

nesf

miju wrote: »

it was an election "promise" so they do have five years to do it. bit OT here but it's a classic fianna fail tactic. ramp up the ever loving fook in public spending then post election "everyone tighten their belts" then just in time for next election they ramp it up like crazy again.

Off-topic: I think you mean it's a classical political tactic. It's the same across the world, public spending matched up really closely to the election cycle. Politicians would be fools if they didn't tbh. Giving your toughest budget of your term 6 months before a general election would be idiocy outside of extreme circumstances.

queenlex

mathie wrote: »

If FF do anything other than lower the rate to 40% then it's yet another broken promise.
M

Not meaning to go far off topic but there i no chance of the top rate being lowered in the near future we have to fund all the projects planned transport and others and we couldnt even do that before the government revenues went down.

queenlex

nesf wrote: »

Off-topic: I think you mean it's a classical political tactic. It's the same across the world, public spending matched up really closely to the election cycle. Politicians would be fools if they didn't tbh. Giving your toughest budget of your term 6 months before a general election would be idiocy outside of extreme circumstances.

I understand and accept your point but whatever happened honesty? They might have more chance of my vote for one if they showed a bit of honesty.

On the topic its obviously the bubble has burst and the question is whether the air is rapidly or slowly leaving.

One recent article was this apologies if already quoted -

http://home.eircom.net/content/irelandcom/topstories/11237099?view=Eircomnet&cat=TopStories

Imho anyone buying a home now particularly first time buyers would be crazy unless they are willing to put in 'cheeky' offers well below asking price its a buyers market clearly but it could get a whole lot better for first time buyers if they show a bit of patience and a lack of desperation. If things go bad employment-wise as it already has and will in construction foreign workers who keep the buy-to-let market going will be gone and the owners will be left with big mortgages and interest rate rises which dont seem to be over yet.

nesf

queenlex wrote: »

I understand and accept your point but whatever happened honesty? They might have more chance of my vote for one if they showed a bit of honesty.

People say that but very few of them actually mean it since they really wouldn't like the truth about the majority of things.

Anyway, this is going far too off-topic.

gurramok

Euroland inflation at 2.6% for October.

This is quite shocking and a huge jump from the forecasted 2.3% and the 2.1% recorded in September, nevermind the forecast of 3% in Germany alone and we all know the Germans hate inflation.
http://www.rte.ie/business/2007/1031/eurozone.html

Even though its an estimate, its not looking good for holding ECB rates steady in the future.
This is another nudge to another nail in the coffin of the bubble.

The_Conductor

Given their mandate, and previous comments concerning inflation- I think we can take it for granted that there is another 1/4 hike immediately on the horizon, with the possibility of further. Wish I could fire Austin Hughes.......

Colonel Sanders

smccarrick wrote: »

Wish I could fire Austin Hughes.......

Must say if I was paying an economist who was this far off the mark he'd already be gone!!!

whizzbang

Colonel Sanders wrote: »

Must say if I was paying an economist who was this far off the mark he'd already be gone!!!

I guess it depends what you were paying him to do...

Colonel Sanders

whizzbang wrote: »

I guess it depends what you were paying him to do...

very true, keep the bubble going at all costs.....

SkepticOne

Can't find anything on the mainstream sites or on the of ESRI or PTSB yet but someone on the thepropertypin.com has the figures:

Prices down 0.3% for September. Note that most people believe that this index seriously underestimates the actual falls which are probably nearer 20% down on the year.

http://www.thepropertypin.com/viewtopic.php?t=4336

Nov. 1 (Bloomberg) -- Following is a breakdown of September Ireland 
house prices from permanent tsb and ESRI in Dublin: 
*T 
============================================================================ 
                       Sept.    Aug.    July    June     May   April   March 
                        2007    2007    2007    2007    2007    2007    2007 
============================================================================ 
                    -------------------------- YoY ------------------------- 
National               -2.8%   -1.9%   -0.7%    0.9%    2.6%    5.1%    7.4% 
Outside Dublin         -3.4%   -2.9%   -1.8%   -0.4%    1.5%    4.1%    6.7% 
Dublin                 -3.4%   -0.6%    0.5%    4.1%    7.6%   10.6%   11.7% 
New Houses             -1.7%   -1.2%    0.1%    1.7%    3.3%    5.5%    7.0% 
Existing Houses        -4.8%   -1.8%   -0.4%    1.0%    2.4%    4.7%    6.4% 
First Time Buyers      -4.7%   -2.4%   -1.2%    0.6%    3.3%    6.5%    8.9% 
Second Time Buyers     -3.1%   -2.0%   -1.0%    0.7%    2.6%    5.0%    7.2% 
Commuter Counties      -4.7%   -3.7%   -1.2%    0.9%    3.0%    4.8%    8.0% 
3 Bed Semi             -2.4%   -2.3%   -1.4%    0.2%    2.3%    5.6%    8.0% 
 
============================================================================ 
============================================================================ 
                       Sept.    Aug.    July    June     May   April   March 
                        2007    2007    2007    2007    2007    2007    2007 
============================================================================ 
                    -------------------------- MoM ------------------------- 
National               -0.3%   -0.3%   -0.4%   -0.5%   -0.8%   -0.8%   -0.6% 
Outside Dublin          0.1%   -0.1%   -0.2%   -0.9%   -0.8%   -1.3%   -0.6% 
Dublin                 -1.2%   -0.1%   -1.9%   -1.3%   -1.2%    0.1%    0.1% 
New Houses              0.0%   -0.4%   -0.4%   -0.7%   -1.0%    0.0%   -0.7% 
Existing Houses        -2.2%   -0.4%   -0.3%   -0.3%   -0.8%   -0.8%   -0.6% 
First Time Buyers      -1.6%    0.0%   -0.4%   -0.9%   -1.8%   -0.8%    0.1% 
Second Time Buyers     -0.3%   -0.2%   -0.7%   -0.5%   -0.5%   -0.9%   -0.5% 
Commuter Counties       0.1%   -1.3%   -0.3%   -0.7%    0.3%   -1.8%   -0.8% 
3 Bed Semi              0.6%    0.9%    0.5%   -1.4%   -1.9%   -0.9%    0.7% 
                    --------------------- Price in EUR --------------------- 
National             299,483 300,375 301,267 302,605 304,166 306,619 309,071 
Outside Dublin       257,372 256,991 257,372 257,945 260,234 262,333 265,767 
Dublin               405,343 410,466 411,069 418,905 424,631 429,754 429,151 
New Houses           296,796 296,796 297,879 298,962 301,128 304,161 304,161 
Existing Houses      295,398 302,143 303,492 304,391 305,290 307,763 310,236 
First Time Buyers    264,548 268,904 268,904 270,093 272,667 277,617 279,795 
============================================================================ 
                       Sept.    Aug.    July    June     May   April   March 
                        2007    2007    2007    2007    2007    2007    2007 
============================================================================ 
Second Time Buyers   336,111 337,119 337,875 340,143 341,906 343,670 346,946 
Commuter Counties    325,813 325,568 329,732 330,712 332,917 331,937 338,062 
3 Bed Semi           302,982 301,197 298,520 296,958 301,197 306,998 309,675 
                    --------------------- Index Levels --------------------- 
National               134.3   134.7   135.1   135.7   136.4   137.5   138.6 
Outside Dublin         134.9   134.7   134.9   135.2   136.4   137.5   139.3 
Dublin                 134.5   136.2   136.4   139.0   140.9   142.6   142.4 
New Houses             137.0   137.0   137.5   138.0   139.0   140.4   140.4 
Existing Houses        131.4   134.4   135.0   135.4   135.8   136.9   138.0 
First Time Buyers      133.6   135.8   135.8   136.4   137.7   140.2   141.3 
Second Time Buyers     133.4   133.8   134.1   135.0   135.7   136.4   137.7 
Commuter Counties      133.0   132.9   134.6   135.0   135.9   135.5   138.0 
3 Bed Semi             135.8   135.0   133.8   133.1   135.0   137.6   138.8 
============================================================================ 
NOTE: For the index, base year = 2003. 
The commuter counties are Louth, Meath, Kildare and Wicklow. 
3 Bed Semi shows the prices for 3 bedroom, semi-detached houses.

Edit: Report is now up on the ESRI site:
http://www.esri.ie/irish_economy/permanent_tsbesri_house_p/