Housing Bubble Bursting

Zambia

patrickolee wrote:

Or maybe it means higher supply - higher demand - stable prices.

Anyway I was going more for... more houses - more houses for sale. Quoting the number of house available on one particular (relatively new to sales) website is probably not such a strong argument for the sky to fall in.

Just as if 10 people want one house, the bids went up in the last ten years.

If ten houses (same condition) want the one buyer well then the cheapeast one will win. So those prices will drop to meet the buyers.

Not saying the sky will fall but its sure as hell is raining ask anyone selling a house in commuterville (or newbridge).

ixoy

Out of curiosity, does anyone have any idea of what percentage of houses (in Dublin in particular) on sale appear on daft.ie and/or appear on myhome.ie?

patrickolee

Zambia232 wrote:

Not saying the sky will fall but its sure as hell is raining ask anyone selling a house in commuterville (or newbridge).

Oh I agree anyone selling a house right at the moment will probably be disappointed in the amount of attention they are attracting. But how much of that can be ascribed to the uncertainty of stamp duty.

I don't think there will be a bubble bursting this year (or probably even next), but even still, there's no way I'd buy (or sell) a house 5 weeks before the election with all the parties saying they are going to change stamp duty. I'd probably hang on and see what way that shook out, then decide. I imagine most people would do the same.

jobless

patrickolee wrote:

Oh I agree anyone selling a house right at the moment will probably be disappointed in the amount of attention they are attracting. But how much of that can be ascribed to the uncertainty of stamp duty.

I don't think there will be a bubble bursting this year (or probably even next), but even still, there's no way I'd buy (or sell) a house 5 weeks before the election with all the parties saying they are going to change stamp duty. I'd probably hang on and see what way that shook out, then decide. I imagine most people would do the same.

the stamp duty excuse is a myth....the market had slowed before stamp duty was even mentioned.... its being used as an excuse by the vested interests

patrickolee

jobless wrote:

the stamp duty excuse is a myth....the market had slowed before stamp duty was even mentioned.... its being used as an excuse by the vested interests

It may have slowed, before the bold Michael opened his big trap 9 months ago, that is debatable. But I don't think it's debatable that the slow has been exacerbated by it.

eirmail

patrickolee wrote:

Oh I agree anyone selling a house right at the moment will probably be disappointed in the amount of attention they are attracting. But how much of that can be ascribed to the uncertainty of stamp duty.

I don't think there will be a bubble bursting this year (or probably even next), but even still, there's no way I'd buy (or sell) a house 5 weeks before the election with all the parties saying they are going to change stamp duty. I'd probably hang on and see what way that shook out, then decide. I imagine most people would do the same.

Thee are plenty of properties under 317500 available in places like newbridge. Just have a look on myhome.ie plenty of 3 bed semis and loads of apartments.
The stamp duty argument just does not stand up in my opinion

Zambia

patrickolee wrote:

Oh I agree anyone selling a house right at the moment will probably be disappointed in the amount of attention they are attracting. But how much of that can be ascribed to the uncertainty of stamp duty.

I don't think there will be a bubble bursting this year (or probably even next), but even still, there's no way I'd buy (or sell) a house 5 weeks before the election with all the parties saying they are going to change stamp duty. I'd probably hang on and see what way that shook out, then decide. I imagine most people would do the same.

I see where your coming from but I was selling a house in July/ August 2006 and the market was fine I got loads of attention and loads of bids and closed in july.

Over the Summer all was well , Mcdowell's little announcement came and it caused me no end of hassle as the buyer had cold feet. Only after Brian cowans no stamp changes anouncement later that month did things take off.

I eventually sold in November, the mood of my EA from July to November changed a lot.

The market is now sliding I dont think any Stamp duty reform at this piont will shore it up nor do I think it should be shored up. I think a nice slide back would be good, however if everyones bails out of there little investment property now (3-4 months) it could crash

The_Conductor

eirmail wrote:

Thee are plenty of properties under 317500 available in places like newbridge. Just have a look on myhome.ie plenty of 3 bed semis and loads of apartments.
The stamp duty argument just does not stand up in my opinion

I agree. The simple problem is with the increase in interest rates, people, pure and simply, do not have the save borrowing capacity that we had even a year ago. The reason so many of the FTB properties are now below the magical 317.5k cut-off point- is that its so difficult to put 317k together now. The banks are a lot more risk averse, they scent blood in the water and rather than throwing more good money after bad, are at long last showing a modicum of intelligence and beginning to pull the plug (in an orderly fashion so as to not create panic).

Vested interests are worried, and are doing their damndest to try not to spook things too much. Unfortunately from their perspective, they have no influence whatsoever on interest rates. They do however have influence on the government- hence the tents in Galway and the 250 Euro a plate election dinners in The Spa Hotel in Lucan etc. They are a lobby group with money, and they know how to make that money count.

Sure, stamp duty is not the problem, the problem is affordability- or lack thereof. Murkying the water with stampduty suits the industry at the moment- because it provides an explanation to a gullible public as to why houses are not selling. If they were to simply say they weren't selling because no-one can afford them, chaos would ensue...... The issue is not the 40k someone must pay in stampduty on a 500k house- its the extra 8k increase that someone with a 350k mortgage is paying every single year in higher interest rates that has crept up over the last 16 months......

Talk about obfusciation

The_Conductor

Zambia232 wrote:

The market is now sliding I dont think any Stamp duty reform at this piont will shore it up nor do I think it should be shored up. I think a nice slide back would be good, however if everyones bails out of there little investment property now (3-4 months) it could crash

It won't take anyone whatsoever to bail out to cause a crash. If 60% of the purchases of new property in 2006 were by non FTBers (not all are buy to let investors, but a significant majority of them were), and these investors instead of bailing, simply sit on the sidelines because their asset appreciation isn't going to happen anymore- thats 60% of the market for new property gone in a flash.

First Time Buyers are getting a field day- I have heard of one developer in Adamstown now offering a 1 year mortgage moratorium (up from 9 months only a few weeks ago) to new FTBs who are willing to sign up......

This is an effective reduction in asking prices of perhaps 8%- however the selling agent is denying vehemently that this practice is a reduction in price.

I do not think that its a case of pessimism or schadenfreude here on this thread- after all everyone is affected by our run-away economy, whether it registers with them or not. How many people took out capital release mortgage top-ups on their revalued homes in the good times and now have to repay at higher interest rates? Schadenfreude means to happiness or glee at other people's misfortune. Its not other people misfortune though- its all of ours, regardless of whether we own property or not. We are all in the same boat. Perhaps in different situations and circumstances, but by god, we are all in the same boat, and the boat is hitting choppy waters.....

gurramok

Estate Agents start to layoff staff due to 'slowdown'

http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1816692&issue_id=15538

'LEADING estate agents have begun to feel the pinch of the property market slowdown with confirmation of redundancies at two main companies over the past couple of months.

Gunne Residential has made eight people redundant and has closed two branches in Bray, Co Wicklow, and Swords, Co Dublin, with the consolidation of these businesses to Dun Laoghaire and Fairview. Douglas Newman Good yesterday confirmed five redundancies.

Several other agents are believed to be reviewing their businesses in light of the slowdown in the residential market, particularly in the Dublin region.'

daveirl

This post has been deleted.

babytooth

Gurgle wrote:

lol

We have a new winner.

Thats the worst thought out arguement in these 68 pages of silliness.

No risk except inflation?
Inflation isn't a risk, its pretty much guaranteed.

20 years ago for 50k you could have bought a house in a decent area in Dublin and have enough change for a new car.

Now, all you get is the car.

Sell that house now for 500k and put the money in a deposit account for 20 years, do you think you will have enough money for a house?

I seriously doubt it.

Maybe you'll be able to buy a BMW for 500k in 20 years. You might have to make it a 3 series and cut back on the alloy wheels and inertial stabilisers.

Speculators are short term investors, their plan relies on short term house price growth far outstripping inflation.

A long term investor relies on price growth being not too far behind inflation over a couple of decades.

A long term investor entering the housing market now is as sure of making his money as they were 20 years ago, before the housing boom.

They aren't likely to see the same 1000% return along with 20 years of rent, but then the people investing 20 years ago had no reason to expect that return either. They just got lucky and hit the jackpot.

and you mean to say that only cash as an asset lcass is eroded by inflation, add houses and stock and everything to inflation erroded value holdings...

Zambia

gurramok wrote:

Estate Agents start to layoff staff due to 'slowdown'

http://www.unison.ie/irish_independent/stories.php3?ca=9&si=1816692&issue_id=15538

'LEADING estate agents have begun to feel the pinch of the property market slowdown with confirmation of redundancies at two main companies over the past couple of months.

Gunne Residential has made eight people redundant and has closed two branches in Bray, Co Wicklow, and Swords, Co Dublin, with the consolidation of these businesses to Dun Laoghaire and Fairview. Douglas Newman Good yesterday confirmed five redundancies.

Several other agents are believed to be reviewing their businesses in light of the slowdown in the residential market, particularly in the Dublin region.'

Wasn't Gunne brought recently it could be a re-structure. I cant see how this early they are laying off staff

nesf

smccarrick wrote:

I do not think that its a case of pessimism or schadenfreude here on this thread- after all everyone is affected by our run-away economy, whether it registers with them or not. How many people took out capital release mortgage top-ups on their revalued homes in the good times and now have to repay at higher interest rates? Schadenfreude means to happiness or glee at other people's misfortune. Its not other people misfortune though- its all of ours, regardless of whether we own property or not. We are all in the same boat. Perhaps in different situations and circumstances, but by god, we are all in the same boat, and the boat is hitting choppy waters.....

Well firstly I was just having some fun.

Secondly, there is to an extent a kind of glee about the impending doom in the air atm (not necessarily people in this thread I haven't paid enough attention to it to have an idea of changing moods etc). What I see when I look around is a kind of vindication on people's faces because they were the prophets 2 years ago of this happening (though as of yet little has happened tbh). The thing is that it really is so damn random and there are so many causal factors in a market like this that is so open to outside influence that I have difficulty agreeing with anyone saying that they predicted it. I've been hearing predictions of doom for the past 7 or 8 years from different sources and the only thing different about the present group of bears is that they got lucky and the market did turn their way or start to turn their way depending on whether you're a bear/bull/neutral. To borrow a phrase from Taleb, they've been fooled by randomness and think their theories work.



Oh and the stamp duty argument has some merit at the lower end of the market, but the turndown in the upper end of the market has been there for quite some time at this point and is (probably) unrelated. To dismiss it totally though is a mistake imho.

HashSlinging

no houses sold at auction this week. Weird as even though theres no bids been placed on houses, they are quoting higher prices for the next auction.

tHE vAGGABOND

'LEADING estate agents have begun to feel the pinch of the property market slowdown with confirmation of redundancies at two main companies over the past couple of months

TBH, I have looked at loads of places over the last few months and there are a lot of estate agents out there who are very bad at their jobs..

No sales skills and a very bad attitude, as if the fact I want to view a property before I spend a few hundred grand on it is unnecessary and a burden on their lives..

The only agents who are consistently good are the remax folks, who works for themselves and are generally hungary and actually seem like they have been in the properies before and are therefore able to answer questions..

Zambia

HashSlinging wrote:

no houses sold at auction this week. Weird as even though theres no bids been placed on houses, they are quoting higher prices for the next auction.

How do you find that out , purely out of interest.

chump

nesf wrote:

Well firstly I was just having some fun.

Secondly, there is to an extent a kind of glee about the impending doom in the air atm (not necessarily people in this thread I haven't paid enough attention to it to have an idea of changing moods etc). What I see when I look around is a kind of vindication on people's faces because they were the prophets 2 years ago of this happening (though as of yet little has happened tbh). The thing is that it really is so damn random and there are so many causal factors in a market like this that is so open to outside influence that I have difficulty agreeing with anyone saying that they predicted it. I've been hearing predictions of doom for the past 7 or 8 years from different sources and the only thing different about the present group of bears is that they got lucky and the market did turn their way or start to turn their way depending on whether you're a bear/bull/neutral. To borrow a phrase from Taleb, they've been fooled by randomness and think their theories work.



Oh and the stamp duty argument has some merit at the lower end of the market, but the turndown in the upper end of the market has been there for quite some time at this point and is (probably) unrelated. To dismiss it totally though is a mistake imho.

That's complete nonsense really, the immensity of the change in sentiment in the last 9/12 months in internet circles is apparent to anyone who witnessed it.

Askaboutmoney had to ban the discussion of a housing crash because the strength of opinion expressed therein - around this time a few irish-specific sites sprung up, for example

thepropertypin.com :Creation Date: 14-jun-2006 per whois.net
irish-property-bubble.blogspot.com: 1st posting April last year

irishhousepricesfalling.blogspot.com : first posting Oct 2006

daftwatch: it seems the script was made in 2006-10-24

Now if you're telling me that this isn't the case - that there wasn't a huge upsurge in negative sentiment as underlined by these results - I don't buy it.

Of course there was naysayers in the past, there will always be naysayers - but the frank lunacy of the market became blatantly clear in the last year, and that is why there was such an increase in negative sentiment.

And also this whole doom-monger blah blah blah nonsense that gets spouted is complete rubbish - so someone can't express an opinion that is different to the norm without being labelled in this derogatory manner?
So you either tow the party line, or else you're a doom-monger.

And as for glee - what about the glee expressed (by way of fancy yachts, cars, houses, holiday homes, private jets, etc..) by all the punters who made a killing on extracting ungodly profits from their countrymen in the last decade.

whizzbang

daveirl wrote:

This post has been deleted.

rental availability is way up though! investors taking in rentors are they can't sell perhaps?

whizzbang

chump wrote:

daftwatch: it seems the script was made in 2006-10-24

I started a script in July last year recording availiability daily, Daftwatch took a copy of my data in October.

The_Conductor

nesf wrote:

Oh and the stamp duty argument has some merit at the lower end of the market, but the turndown in the upper end of the market has been there for quite some time at this point and is (probably) unrelated. To dismiss it totally though is a mistake imho.

I really do think the stamp duty argument is without merit- specifically for first time buyers. Over 94% of first time buyers do not pay stamp duty. In the second hand market those properties that are aimed at the FTB market used to be magically lumped around the 317k magical price point. Average asking prices for FTBs are now however in the Dublin area more akin to the 280k mark, than the 317k (particularly when you factor in things like 6/9/12 months of mortgage payments that some developers are ponying up to offload apartments that are sitting there (Adamstown for example).

The stamp duty issue is an issue in the second hand market- particularly for those who wish to trade up. However- of even more importance is interest rates- every .25% rise knocking around 30k off people's borrowing capacity. Thats across the board in all housing categories, not just the more expensive houses (but people see it effecting here more quickly- as there is a thinner volume of trade in that segment anyhow).

Personally I think stamp duty is an unfair taxation policy that is in need of urgent reform. It was never intended as a form of taxation- hell, originally it was a small charge in recognition of the costs involved in filing papers with the deed office- and was revenue neutral, it was simply run on a cost recovery basis. I am not advocating that we go back to those days- particularly as the government is used to this stream of income and would simply whack us elsewhere instead were it abolished- possibly with the likes of the council tax they have in the UK. I do think it should be gradiated into bands though and those should be discrete bands, on which their % rates did not cascade into preceding bands. In the interests of equity perhaps have a low 1% band up to say 250k, between 250 and 300k 2%, 300 and 350k 3%, 350 and 400k 4%, 400 and 450k 5%, 450 and 500k 6%. All over 500k at a flat 10% (I know its a case of wealth redistribution- but then again isn't that what Bertie and Co have said they want to do anyway?)

The biggest factor governing affordability is the availability of hard-cash. That availability has increased sharply in price. People's incomes have not compensated- hence their purchasing power has fallen. So they are not in a position to pay the same prices for property. A one of charge of 30 or 40k- while expensive, is on a cost basis far less hurt than a 1% increase in interest rates. We've had almost 2% increase so far, and counting. Thats what I meant.

is_that_so

chump wrote:

And as for glee - what about the glee expressed (by way of fancy yachts, cars, houses, holiday homes, private jets, etc..) by all the punters who made a killing on extracting ungodly profits from their countrymen in the last decade.

This post was worth reading until you threw this in. Aside from the fact that you have misused the word glee. It is somewhat off-topic and not really conducive to the discussion at hand.
But the comment posed by nesf does beg the question. Why is there more than a whiff of undisguised glee at the possible misery of others, in this thread? Ultimately what are those, who are convinced of the crash, trying to say apart from, I told you so? I don't think there is any denial at this point that some form of change is happening. And even if there was we have been well "educated" on the dangers at this point.

nesf

chump wrote:

That's complete nonsense really, the immensity of the change in sentiment in the last 9/12 months in internet circles is apparent to anyone who witnessed it.

Askaboutmoney had to ban the discussion of a housing crash because the strength of opinion expressed therein - around this time a few irish-specific sites sprung up, for example

thepropertypin.com :Creation Date: 14-jun-2006 per whois.net
irish-property-bubble.blogspot.com: 1st posting April last year

irishhousepricesfalling.blogspot.com : first posting Oct 2006

daftwatch: it seems the script was made in 2006-10-24

Now if you're telling me that this isn't the case - that there wasn't a huge upsurge in negative sentiment as underlined by these results - I don't buy it.

Of course there was naysayers in the past, there will always be naysayers - but the frank lunacy of the market became blatantly clear in the last year, and that is why there was such an increase in negative sentiment.

And also this whole doom-monger blah blah blah nonsense that gets spouted is complete rubbish - so someone can't express an opinion that is different to the norm without being labelled in this derogatory manner?
So you either tow the party line, or else you're a doom-monger.

And as for glee - what about the glee expressed (by way of fancy yachts, cars, houses, holiday homes, private jets, etc..) by all the punters who made a killing on extracting ungodly profits from their countrymen in the last decade.

What kind of response was that? Create a straw man using internet discussion and conveniently ignore print and media discussion about the market in the past decade, make out that you are called a doom monger because you don't tow some party line or another and then put in a bitter little bit at the end about the ungodly profits made by people in the last decade?

People have been guessing that the market will turn for a good many years, the only reason you've seen an increase in posts online in the past 6-9 months is because interest rates have been climbing and your average punter has slowly been realising that it's possible for the ECB to rise rates. It doesn't change the fact that predictions of a crash have been around for much longer. It's been the same story with the bulls, if that makes you feel any better. They've been guessing that the market will keep going up for the past decade too, they just won the coin toss.

nesf

smccarrick wrote:

I really do think the stamp duty argument is without merit- specifically for first time buyers. Over 94% of first time buyers do not pay stamp duty. In the second hand market those properties that are aimed at the FTB market used to be magically lumped around the 317k magical price point. Average asking prices for FTBs are now however in the Dublin area more akin to the 280k mark, than the 317k (particularly when you factor in things like 6/9/12 months of mortgage payments that some developers are ponying up to offload apartments that are sitting there (Adamstown for example).

The stamp duty issue is an issue in the second hand market- particularly for those who wish to trade up. However- of even more importance is interest rates- every .25% rise knocking around 30k off people's borrowing capacity. Thats across the board in all housing categories, not just the more expensive houses (but people see it effecting here more quickly- as there is a thinner volume of trade in that segment anyhow).

Personally I think stamp duty is an unfair taxation policy that is in need of urgent reform. It was never intended as a form of taxation- hell, originally it was a small charge in recognition of the costs involved in filing papers with the deed office- and was revenue neutral, it was simply run on a cost recovery basis. I am not advocating that we go back to those days- particularly as the government is used to this stream of income and would simply whack us elsewhere instead were it abolished- possibly with the likes of the council tax they have in the UK. I do think it should be gradiated into bands though and those should be discrete bands, on which their % rates did not cascade into preceding bands. In the interests of equity perhaps have a low 1% band up to say 250k, between 250 and 300k 2%, 300 and 350k 3%, 350 and 400k 4%, 400 and 450k 5%, 450 and 500k 6%. All over 500k at a flat 10% (I know its a case of wealth redistribution- but then again isn't that what Bertie and Co have said they want to do anyway?)

The biggest factor governing affordability is the availability of hard-cash. That availability has increased sharply in price. People's incomes have not compensated- hence their purchasing power has fallen. So they are not in a position to pay the same prices for property. A one of charge of 30 or 40k- while expensive, is on a cost basis far less hurt than a 1% increase in interest rates. We've had almost 2% increase so far, and counting. Thats what I meant.

I agree with you almost completely but I wouldn't disregard it completely, increased uncertainty will always play a role in the market and at the moment stamp duty (combined with the ECB, the US economy etc etc) is adding to the uncertainty and will affect some potential home buyers/investors. How big a difference it makes is really something I don't know and wouldn't comment on, I just wouldn't completely discount it.


Everything else you said about the taxation is very true, but I'm unsure whether reforming the system would be healthy for the market at the moment (i.e. could it cause an inverted dead cat bounce if you know what I mean?).

joemc99

iguana wrote:

He'd have to pay cgt on the sale price as the house isn't his home.

plus, inflation is @ ~ 4.5%, so the gain is gone! Am I missing something here?

homah_7ft

If you want to hear a whingers viewpoint turn on radio one now!

nesf

joemc99 wrote:

plus, inflation is @ ~ 4.5%, so the gain is gone! Am I missing something here?

In fairness to him he wasn't actually advocating that someone put the money into a deposit account. He was using a deposit account as being better to show just how bad it was according to his argument.

mathie

homah_7ft wrote:

If you want to hear a whingers viewpoint turn on radio one now!

Why what were they saying?

RuggieBear

erm...just as a little sidenote:

just checked on myhome.ie and the asking price forone of the neighbours houses (literally exactly the same as the one i'm renting) is 680k not the 500k i reckoned.

Insane!

Boggle

Why is there more than a whiff of undisguised glee at the possible misery of others, in this thread?

I would think that people without a home are more excited at the possibility of finally being able to afford their own home

and

those with a new home are resentful of being shackled with a crippling debt so that a few speculators could increase their return on investments.


Honestly, when did having your own home become a dispensible commodity?