Housing Bubble Bursting

uncanny

20goto10 wrote: »

I do not think most of them realise the consequences.

Hmmm

Improved competitiveness
Less inflationary pressure in the economy
Restart of the construction industry once prices return to affordable levels
Higher disposable incomes due to lower mortgage payments
Increased general consumption due to less 'dead money' (interest payments on non productive housing debt)
Reduced/removed risk of financially crippling negative equity
Increased economic/social mobility

Yeah - 50-70% falls in property prices sound like just the job for the economy alright.;)

20goto10

uncanny wrote: »

Hmmm

Improved competitiveness
Less inflationary pressure in the economy
Restart of the construction industry once prices return to affordable levels
Higher disposable incomes due to lower mortgage payments
Increased general consumption due to less 'dead money' (interest payments on non productive housing debt)
Reduced/removed risk of financially crippling negative equity
Increased economic/social mobility

Yeah - 50-70% falls in property prices sound like just the job for the economy alright.;)

This is beyond ridiculous. Can everyone please read my posts?! I do not think they realise the consequences of a worsening economy. Not the consequences of cheaper houses.

A 70% drop in house prices means one thing and one thing only, our economy is buggered. Whether a 70% drop be good or bad for FTB's is no concern of mine. I do not want to see that situation and anyone with an ounce of sense, FTB or otherwise does not want to see our economy buggered beyond repair.

Anyone who thinks a 70% drop can happen in parallel with a stabilisation of the economy or that it has no connection at all to the state of the economy is talking through their hats.

gurramok

20goto10 wrote: »

No I'm not. Putting it in bold does not change what I was saying.

Its clear to everyone else bar you of what you said.

20goto10 wrote: »

This is beyond ridiculous. Can everyone please read my posts?! I do not think they realise the consequences of a worsening economy. Not the consequences of cheaper houses.

A 70% drop in house prices means one thing and one thing only, our economy is buggered. Whether a 70% drop be good or bad for FTB's is no concern of mine. I do not want to see that situation and anyone with an ounce of sense, FTB or otherwise does not want to see our economy buggered beyond repair.

We're all ears, tell us why high house prices benefit the economy?

20goto10

gurramok wrote: »

Its clear to everyone else bar you of what you said.



We're all ears, tell us why high house prices benefit the economy?

you may be all ears but you clearly have a dyslexia problem. Either that or you're just trolling.

I'm not going to tell you why high house prices benefit the economy because at no stage anywhere on this forum has that been my argument.

uncanny

20goto10 wrote: »

I do not think they realise the consequences of a worsening economy.

You seem to be confusing exhorbitant property prices with a healthy functioning economy. The main reason our economy and banking system is currently crippled is because of ludicrous unsustainable property prices to which the country became addicted for employment, tax revenue & idle speculation founded on completely baseless capital appreciation.

I do not want to see that situation and anyone with an ounce of sense, FTB or otherwise does not want to see our economy buggered beyond repair.

It's a bit late for that.

SimpleSam06

20goto10 wrote: »

A 70% drop in house prices means one thing and one thing only, our economy is buggered.

Okay this seems to be the pin which your whole problem swings here, so let me try to get through.

RESIDENTIAL CONSTRUCTION IS WORTHLESS TO THE ECONOMY.


RESIDENTIAL CONSTRUCTION IS WORTHLESS TO THE ECONOMY.


RESIDENTIAL CONSTRUCTION IS WORTHLESS TO THE ECONOMY.

Sing it with me now.

Calina

20goto10 wrote: »

you may be all ears but you clearly have a dyslexia problem. Either that or you're just trolling.

I'm not going to tell you why high house prices benefit the economy because at no stage anywhere on this forum has that been my argument.

You are arguing against falling house prices as they are detrimental to the economy.

Unfortunately, we have high houses prices at the moment. They are also detrimental to the economy. Seeing as you appear to argue against them falling, I can only guess that you consider that high houses prices benefit the economy more than falling and lower house prices.

Can you clarify please?

20goto10

SimpleSam06 wrote: »

RESIDENTIAL CONSTRUCTION IS WORTHLESS TO THE ECONOMY.

WHERE DID I SAY IT WAS?

ITS A REFLECTION OF THE STATE OF THE ECONOMY. YOU WON'T GET A 70% DROP IN A HEALTHY ECONOMY. YOU'LL ONLY GET THAT WERE THE CREDIT CRISIS TO STAY BAD OR WORSEN.

Calina

I'd like it if the two of you stopped using large font block capitals please.

GeorgeBailey

Calina wrote: »

You are arguing against falling house prices as they are detrimental to the economy.

as far as I can tell what he is saying isn't that falling house prices are bad for the economy but that if they do fall by 70% then that's more than likely because the general economy is buggered.

spockety

Were the housing bubble crashes in Japan and Britain and Norway as a direct result of a bad economic state, as you seem to be suggesting 20goto10?

(Not being funny, genuine question...)

Ireland is not the first country to experience a bubble and subsequent crash, and I'm sure that no matter how people try to spin it, we will end up being no different to other countries that have experienced this. Perhaps we can learn from them.

uncanny

20goto10 wrote: »

YOU WON'T GET A 70% DROP IN A HEALTHY ECONOMY.

You won't get a 400% gain when wages only rose by 100% in a healthy economy either.

Maybe in an asset bubble.

uncanny

GeorgeBailey wrote: »

as far as I can tell what he is saying isn't that falling house prices are bad for the economy but that if they do fall by 70% then that's more than likely because the general economy is buggered.

What if the economy is buggered because house prices became too high and they need to fall by 70% to restore affordability & competitiveness?

20goto10

20goto10 wrote: »

WHERE DID I SAY IT WAS?

ITS A REFLECTION OF THE STATE OF THE ECONOMY. YOU WON'T GET A 70% DROP IN A HEALTHY ECONOMY. YOU'LL ONLY GET THAT WERE THE CREDIT CRISIS TO STAY BAD OR WORSEN.

(not shouting..) The economy hasn't been healthy for a long time.

The "boom" we experienced recently was more a sympton of an economy on speed! now we have the withdrawl symptoms. this means that reletive prices of goods, services & wages etc are returning to their "correct" values relative to each other.

Jesus Wept

Will rent prices drop significantly?

gurramok

20goto10 wrote: »

you may be all ears but you clearly have a dyslexia problem. Either that or you're just trolling.

Nope, no dyslexia here nor trolling, perhaps examine your posts?

20goto10 wrote: »

I'm not going to tell you why high house prices benefit the economy because at no stage anywhere on this forum has that been my argument.

Yes you do. A 20% drop is still a high price which benefits nothing to teh economy.

A 70% drop in house prices means one thing and one thing only, our economy is buggered.
making some FTBs sit back and pray for a worsening economic situation
I do not think they realise the consequences of a worsening economy.
I'm all for lower prices to a certain degree. 20% was the figure passed about at the start of the decline

Now the following is just madness..

They're hoping for drastic declines in house prices. something that is only going to happen if the credit situation stays bad or gets worse. I do not think most of them realise the consequences.

What are the consequences?

YOU WON'T GET A 70% DROP IN A HEALTHY ECONOMY. YOU'LL ONLY GET THAT WERE THE CREDIT CRISIS TO STAY BAD OR WORSEN.

Bubbles everywhere that have burst have had no global credit crunch to burst them. We are the first unique case of this i think.

Proof? - Japan, Finland, Sweden, UK etc. Look up the history of Housing Bubbles.

SimpleSam06

Calina wrote: »

I'd like it if the two of you stopped using large font block capitals please.

lol

GeorgeBailey wrote: »

as far as I can tell what he is saying isn't that falling house prices are bad for the economy but that if they do fall by 70% then that's more than likely because the general economy is buggered.

It looks like he started out saying that without housing we were all doomed, then he tried to switch his story when he got dogpiled.

uncanny

The-Rigger wrote: »

Will rent prices drop significantly?

Probably not because they never increased as much as house prices. Rents became disconnected from property prices during the bubble.

Prospective gross yields of 2% were not uncommon in Dublin in 2006.

asdasd

and they need to fall by 70% to restore competitiveness?

Yes, falls in wages will not be such an issue if housing, interest rates and rent decline. Heart goes out to those suckered into the game already, though.

jmayo

20goto10 wrote: »

Once again the FTBs warp things to fit in with their little fantasy world of buying houses for cash. I'm not going to get into an argument with someone who thinks the credit crunch is normal or needs further crunching before it can be considered normal. Especially from the same people who blast people down as a "vested interest" whenever they're losing an argument. Its clear as day who are the party with vested interests on this forum. The funny thing is, the worse things get the less chance you'll ever have of owning a home, no matter what the price.

I AM NOT A FTB.
Ok got that ?
Just because someone is of the opinion that our hosuing bubble post 2001 was not a good thing for the economy, that prices got ridiculously high and that really does need to bea realinement does not automatically mean one is a FTB.

I do not think the credit crunch between the banks is normal, but you appear to think that the days of 100% 40 year personal mortgages will come back.
The real credit crunch is not the fact the banks won't give out mortgages willy nilly,it is that the banks themselves cannot borrow money from one another and then lend to business.

Yes vested interests are those that seem to want to preserve a housing market that is grossly inflated i.e. avergae house prices are too high a multiple of average wages.

Speaking of making assumptions I would bet you are sitting on an apartment that was bought since 2005, that is drastically losing money and you see negative equity rolling in with nobody interested in buying.
You see we can all make assumptions.

Caoimhín wrote: »

Mmm, not sure about that friend.

I have no interest in seeing a prolonged recession as my business will suffer. I do have an interest in seeing an end to the speculation and gambling on the housing "market". I believe houses are for families to live in, not to make a quick buck on.
I certainly see your point when you say FTB's have a vested interest in seeing house prices falling but i dont believe that's the same as the vested interest that professional market speculators have.
There is a big difference between wanting home prices to become affordable and wanting asset values to increase.

Houses became an investment commodity where people began to assume they would rise in price and they could offload to another dumb paddy whilst making a handsome profit.
Affordable is the point. To me getting a 100% mortgage that you have to pay off over 40 years does not really make something affordable. It just means that if I start at 25 I am still saddled with it into my pension years.

ZYX wrote: »

Some properties will become very, very cheap. That is small appartments and any property in poor locations. In UK in Eighties I remember driving down a street in my second hand car thinking my car was worth more than any house on that street. That is how low prices can go in poor areas. That been said I could not afford a house in an area worth living in. People get too wrapped up in average house price and think every house will drop the average. They will not.

All boats will be lowered in a falling tide.
Yes some properties will drop more than others, just like some properties had risen more than others, but it would be very foolhardy to believe some properties will be immune.

20goto10 wrote: »

This is beyond ridiculous. Can everyone please read my posts?! I do not think they realise the consequences of a worsening economy. Not the consequences of cheaper houses.

A 70% drop in house prices means one thing and one thing only, our economy is buggered. Whether a 70% drop be good or bad for FTB's is no concern of mine. I do not want to see that situation and anyone with an ounce of sense, FTB or otherwise does not want to see our economy buggered beyond repair.

Anyone who thinks a 70% drop can happen in parallel with a stabilisation of the economy or that it has no connection at all to the state of the economy is talking through their hats.

So we should have high house prices and thus our economy is good ?
Residential construction has had a major influence on the state of our economy, since we had so many people employed in construction and we became over dependent on it for tax revenue.
But we had reached a point where we had an oversupply of housing, meaning prices had to drop. They became unsustainable.
They had begun to level off and drop before the "credit crunch" stopped banks handing out silly money to every Tom, Dick and Harry.

Also added to that people are now trying to pay off large mortgages, that were bearable during very low interest rates, means that consumer spending is taking a hammering and thus our huge retail sector is suffering.

SimpleSam06

jmayo wrote: »

Residential construction has had a major influence on the state of our economy, since we had so many people employed in construction and we became over dependent on it for tax revenue..

Thats all borrowed from future earnings though, it feeds off itself and adds nothing.

johnnyskeleton

20goto10 wrote: »

This is beyond ridiculous. Can everyone please read my posts?! I do not think they realise the consequences of a worsening economy. Not the consequences of cheaper houses.

A 70% drop in house prices means one thing and one thing only, our economy is buggered. Whether a 70% drop be good or bad for FTB's is no concern of mine. I do not want to see that situation and anyone with an ounce of sense, FTB or otherwise does not want to see our economy buggered beyond repair.

Anyone who thinks a 70% drop can happen in parallel with a stabilisation of the economy or that it has no connection at all to the state of the economy is talking through their hats.

I don't want to see our economy going down the drain, I'm not asking for a massive drops in house prices....but from a cold dispassionate point of view I know it's going to happen.

But the thing about capitalism is, it can never be buggered beyond repair. If it gets really bad, you can always do what Wiemar Germany did i.e. replace the Reichsmark with the Deutschmark and say the economy starts again today.

groom

uncanny wrote: »

Probably not because they never increased as much as house prices. Rents became disconnected from property prices during the bubble.

Prospective gross yields of 2% were not uncommon in Dublin in 2006.

Valid point that rents didn't boom in the way of property prices but rents will inevitibly suffer from the oversupply of the last couple of years, the surge of property from the sales market to the rental market and through emirgration / unemployment.

Tomtom1

Read your piece .should a first time buyer take what,s on offer now or wait and hope prices fall further . It seems as the deal gets better mortages are getting thinner on the ground.

thewing

I hope the economy drops like a stone - this country needs a good recession to get back to it's senses. Everything has been based around construction - we export practically nothing. Time to start making money the old-fashioned way - selling products and services as opposed to houses.Land is a finite resource.

As someone who has waited(and waited and waited....) for this crash, long may it continue. Some of the excesses seen over the last 10 years has been unreal. One of the only countries in the world where it's a given to take out a 35 year mortgage - lunacy!

uncanny

Tomtom1 wrote: »

should a first time buyer take what,s on offer now or wait and hope prices fall further .

There's no ifs, buts or maybes about it. Prices are going to fall further - a lot further.

It seems as the deal gets better mortages are getting thinner on the ground.

Which will drive prices down even more. Vendors can only sell for what banks are willing to finance.

gurramok

'Mortgage lenders to demand 20pc cash deposits'
http://www.independent.ie/national-news/mortgage-lenders-to-demand--20pc-cash-deposits-1544130.html

And expect prices to drop further. If other lenders follow suit, its going to be French style deposits needed and thats a good omen.

THE housing market suffered a new blow after it emerged last night that house buyers will have to come up with at least 20pc of the value of properties they plan to buy.

The move will mean buyers will have to produce deposits of €54,000, based on the average price of a house at the moment.

One of the largest lenders in the State, KBC Homeloans said it would now only provide mortgages for 80pc of the value of homes.

Mortgage market experts said other lenders were now likely to follow KBC.

bill_ashmount

gurramok wrote: »

'Mortgage lenders to demand 20pc cash deposits'
http://www.independent.ie/national-news/mortgage-lenders-to-demand--20pc-cash-deposits-1544130.html

And expect prices to drop further. If other lenders follow suit, its going to be French style deposits needed and thats a good omen.

Good stuff. Think I paid about 17 - 18 % of the value of the house as a deposit when I bought. It's the way it should be.

gurramok

More news. http://www.rte.ie/business/2008/1119/economy.html

IBEC says the economy has crashed, predicts a 4% economic decline in 2009 and most noted they say 100,000 people have left the country in 2008 :eek:

Thats 100,000 less renters and buyers out there.

DublinWriter

thewing wrote: »

I hope the economy drops like a stone - this country needs a good recession to get back to it's senses...
As someone who has waited(and waited and waited....) for this crash, long may it continue.

Your argument is self-defeating.

It doesn't matter how long you've waited, without a job you ain't getting a mortgage.

Sean Lemass once said that a rising tide lifts all boats - the opposite is also true my hand-rubbing friend.