Housing Bubble Bursting

The_Conductor

daveirl wrote:

This post has been deleted.

Lol.... too true.
The average person in the street didn't even know the reform was only for FTBs......
It won't cost the exchequer anything much- made a good soundbite, and gave the industry a banner they could all march behind.

Much more telling will be the CSOs employment figures in early July showing how employment in the construction sector is evolving. Most of the information in the public domain is purely annecdotal at the moment- but is hinting at large scale layoffs of contract staff, and several developments being mothballed. Another guaranteed interest rate rise in June...... Interesting times. The list of excuses is evaporating, oh so quickly.....

SimpleSam06

smccarrick wrote:

The list of excuses is evaporating, oh so quickly.....

Just as an exercise, what exactly was the list of excuses?

• Not enough houses, undersupply compared to the rest of Europe - Not so much
• Immigrants will buy the houses - Whoops, they were only migrants
• Interest rates will level off - Nope, someone forgot to tell the ECB
• Wrong time of year, waiting for the new budget, waiting for the elections - stop gap excuses

So really they are left with trying to flog a dying horse, public sentiment. It will be interesting to see the kind of acrobatics they get into trying to achieve that.

eclectichoney

smccarrick wrote:

Lol.... too true.
The average person in the street didn't even know the reform was only for FTBs......
It won't cost the exchequer anything much- made a good soundbite, and gave the industry a banner they could all march behind.

Much more telling will be the CSOs employment figures in early July showing how employment in the construction sector is evolving. Most of the information in the public domain is purely annecdotal at the moment- but is hinting at large scale layoffs of contract staff, and several developments being mothballed. Another guaranteed interest rate rise in June...... Interesting times. The list of excuses is evaporating, oh so quickly.....

just a thing to note - employment is a lagging indicator due to labour hoarding etc. so hours worked may be a more timely indicator, i.e. it may take until Q3 to really see the employment playout

miju

SimpleSam06 wrote:

It will be interesting to see the kind of acrobatics they get into trying to achieve that.

I dont think so. The EA's know the game is up as do developers and everyone else. After stamp duty is shown to be a complete red herring most if not all VI's will being to speak about how people should drop their prices and over supply and fundamentals no longer supporting prices etc etc etc

Builders / EA's / Mortgage Brokers etc make money from building and selling not from no activitiy so this stagnation can only go on so long with them not selling mortgages / building / taking commision before they all begin the push to get people back into the market and that can only be done by dropping the prices ALOT

whizzbang

I take it we are way past the point where extra builders will be hired to finish off properties before customers start to pull out of "buy off the plans" deals?

miju

seems so whizbang the end game is moving a good bit faster than most predicted

johnnyskeleton

Programme on RTE right now about a woman who wants to get into the property market as an investor, buy low and sell high so that she can be financially independent in four years...

I wonder is she going to get a good talking to by the programme's expert?

Pa ElGrande

johnnyskeleton wrote:

Programme on RTE right now about a woman who wants to get into the property market as an investor, buy low and sell high so that she can be financially independent in four years...

I wonder is she going to get a good talking to by the programme's expert?

From the RTE website :-

Life coach and counselor Donna (26) has an ambitious plan, she wants to be financially independent by the time she’s 30 and she feels that property is the way to go.

She started her property portfolio when she realized that her rent cost €36,000 over a three year period. She bought her first property in Budapest and then a house in Maynooth with her partner Tony, a graphic designer. They eventually plan to let this house as they build their portfolio.

The search for Donna’s next property brings us to Athlone, Drogheda and Carlow.

HouseHunters Episode 3

Did somebody die and leave this country a single thought that property was the only way to become rich?

The house in Willow Park, Athlone is still for sale (If there are any "canny" investors still in the market).
The presenter mentioned capital appreciation forecasts of 5/6% this year, however the properties that did sell, did so below asking prices.
The auctioneer also stated you will not cover closing costs such as stamp duty, solictors, maintenence and other fees using capital appreciation in the short term.
The advice from the professional investor was to cultivate your relationship with EA's and letting agents, and only buy property below market value (BMV).

Overall the takeaway from the program is that there is little value in the Irish property market for the investor.

johnnyskeleton

Pa ElGrande wrote:

The auctioneer also stated you will not cover closing costs such as stamp duty, solictors, maintenence and other fees using capital appreciation in the short term.

He gave what seemed like a good dose of reality to her, but the programme just moved on

Pa ElGrande wrote:

Overall the takeaway from the program is that there is little value in the Irish property market for the investor.

It amazed me that there are people out there who think like the person in the show. Could you imagine wanting to be, for example, an accountant, when everybody else also wants to be an accountant, without any training, in a market where the future of accounting is doubtfull, and expecting to be set for life from 4 years work? I'm sure there are lots of canny investors, developers etc who managed to make a living off property during the boom years, and who now have some valuable assets, but if there are a lot of people who entered the market like the person in the show, then maybe the market is in much worse condition than I realise.

SimpleSam06

miju wrote:

seems so whizbang the end game is moving a good bit faster than most predicted

My money is still on Q4 2007, or Q1 2008...

SimpleSam06

SimpleSam06 wrote:

My money is still on Q4 2007, or Q1 2008...

What are you betting will happen by then?
Year on Year figures to be into negative? Could happen next quarterly
For it to be widely known that there is a crash? Or in full swing?
Be explicit! :P


The crash has already begun just things need to play out in order, there might even be a brief and possibly localised dead cat bounce.

Do-more

smccarrick wrote:

Much more telling will be the CSOs employment figures in early July showing how employment in the construction sector is evolving. Most of the information in the public domain is purely annecdotal at the moment- but is hinting at large scale layoffs of contract staff, and several developments being mothballed. Another guaranteed interest rate rise in June...... Interesting times. The list of excuses is evaporating, oh so quickly.....

It will also be interesting to see how the stand off in the property market is going to hit Government finances. There must be a large shortfall in VAT and Stamp Duty returns due to the inactivity in the market, again of course this will lag the market considerably so it may not really hit home until towards the end of the year. The years of budget surplus' (surplii?:D ) are over, me thinks!

Do-more

Do-more wrote:

It will also be interesting to see how the stand off in the property market is going to hit Government finances.

http://www.independent.ie/national-news/tough-times-warning-as-house-tax-falls-euro2bn-684903.html

Pat McArdle, chief economist at Ulster Bank, said the cut in tax revenues could be up to €2bn a year, even with a 'soft landing' in the housing sector.

Do-more

Pat McArdle, chief economist at Ulster Bank, said the cut in tax revenues could be up to €2bn a year, even with a 'soft landing' in the housing sector.

Thank God we have a lean and efficient civil service which will be able to react quickly to the downturn in revenues!

(With the Government taking on average €100,000 in tax on each new home and completions (not sales mind ) expected to be about 63,000 units compared to over 90,000 last year, it's not hard to estimate that €2bn is very conservative, especially as the stamp duty take on 2nd hand homes must have fallen dramatically this year)

Smoggy

from what I have seen the commonly held belief is that the market is on a down turn and that it won't be picking up anytime soon. The only people who think it's a temporary blip are the people who have bought in the last few years.

SimpleSam06

Deleted User wrote:

Be explicit! :P

The crash has already begun just things need to play out in order, there might even be a brief and possibly localised dead cat bounce.

Yup, it began in May 2006, to be honest. As for explicit, well, thats the point when we'll see Joe Murphy sitting in his pub really start to understand that prices are decreasing.

There is still, I believe, a strong faith in the heart of most Irish people that "property is the way to go", and you can't lose on it. The end of 2007 is when the press gets their teeth into the yoy reports, and that belief is shattered.

Really the fundamentals are so far away from this market that the only glue holding it together is public sentiment.

In real terms, its when we'll see the current wobbling slow melt of property prices turn into a full on fry-up. I'd predict a sharp drop in prices pretty much across the board in Q1 2008, continued slide maybe until after the summer, then in September you'll have your dead cat bounce, the "ah the worst is over" feeling. Of course it won't be.

I'd tell anyone to give it at least three years before they even think about buying, and even then they should only think, not buy.

Edit: Oh yes, and since this is the doom and gloom property thread, I might add a few more predicitons:

• Dr Ray Stantz: Fire and brimstone coming down from the skies. Rivers and seas boiling.
• Dr. Egon Spengler: Forty years of darkness. Earthquakes, volcanoes...
• Winston Zeddemore: The dead rising from the grave.
• Dr. Peter Venkman: Human sacrifice, dogs and cats living together - mass hysteria.

Ah sizzler, where are you now?

whizzbang

SimpleSam06 wrote:

There is still, I believe, a strong faith in the heart of most Irish people that "property is the way to go", and you can't lose on it. The end of 2007 is when the press gets their teeth into the yoy reports, and that belief is shattered.

will it really be shattered then? or will people all of a suddenly turn into rational market experts saying "Well yes any market can go into a correction of 10% but this will soon recovered"

SimpleSam06

whizzbang wrote:

rational market experts saying "Well yes any market can go into a correction of 10% but this will soon recovered"

I would hesitate to apply the term "rational" to any market expert that made a statement like that...

whizzbang

SimpleSam06 wrote:

I would hesitate to apply the term "rational" to any market expert that made a statement like that...

I should really have had quotes around it

SimpleSam06

whizzbang wrote:

I should really have had quotes around it

In that case, it depends on how bloody the media bloodbath gets. They have to balance selling newspapers or getting eyeballs against upsetting some of their biggest advertisers. The worst that can happen is the VIs will slow down the decline, rather than stop it, dragging it out far longer than it should go.

I wonder will there be people on here in three years time saying "this year it will pick up!", while everyone else says "ah you've been saying that for years now and it hasn't happened". Funny how the wheel turns, really.

Gurgle

SimpleSam06 wrote:

I wonder will there be people on here in three years time saying "this year it will pick up!", while everyone else says "ah you've been saying that for years now and it hasn't happened". Funny how the wheel turns, really.

lol

has the bubble officially burst then?

SkepticOne

Of course, as with all bubbles, there's no official acknowledgement of the bursting of the bubble. It is really only obvious to most that a bubble has burst months or years after the event. As someone once said, no one rings a bell at the top.

Zambia

Once again the press is not good

http://www.rte.ie/business/2007/0530/houses.html

Prices in the first four months of 2007 have fallen 1.3% compared with growth of 5% in the same period last year.
Advertisement

Nationally, the average property cost €306,619 in April - compared with €310,632 paid in December 2006.

gurramok

Zambia232 wrote:

Once again the press is not good

http://www.rte.ie/business/2007/0530/houses.html

And it's only the start of it.

Some of that report is a bit dubious, substantial price falls have been seen across Dublin in second hand houses with barely a street untouched.

New builds have fallen in price, the massive 'freebies' thrown in like free cars/€25k+ cashback/pay your mortgage for a year/allowances with the purchase have masked the price fall.

Where have all the bulls gone who proclaimed on this thread a few months ago that we will have 5%+ price rise p.a. this year for their soft landing theory ?

digitally-yours

UPDATE 1-Irish April house prices fall for 2nd mth in a row

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=economicIndicatorsNews&storyID=2007-05-30T133522Z_01_L30513057_RTRIDST_0_IRELAND-ECONOMY-HOUSE-PRICES-UPDATE-1.XML

dochasach

Do-more wrote:

Interesting piece on land prices in the Farmers Journal

According to a survey exclusively compiled by Savills HOK, Ireland has the most expensive agricultural land in Europe. Not only that, but the average figure for Ireland is almost double the average for the second most expensive country in Europe, namely Luxembourg, indicating that Irish values are streets ahead of its European counterparts.

The figures reveal the stark reality that land in Ireland is five times more expensive than England, 6.5 times more expensive than Germany and Wales, 9.5 times more costly than Scotland, 13 times more expensive than France and a massive 40 times more costly than Poland.

Aye, but surely the farm land on this isle is 40 times more productive than that durty Polish land and heyah we have a fast broadband inertnet connection less than 600 miles away. We'll be grand, but if 'twere me, I'd be off to sell my farm land before you can say Q#$&ATh0(@*&NO CARRIER

---

dochasach

SimpleSam06 wrote:

Not to worry, sure won't the immigrants buy every field in Leitrim.

Don't count on foreigners sustaining this bubble until this law is changed:

In the Republic of Ireland, foreigners (except those with 7 years continuous residence) are required to obtain the permission of the Land Commission to purchase land or hold a lease, mortgage or contractual interest, such as an option, in agricultural land

I certainly understand the reason for this was to prevent buyout, speculation, subdivision and overdevelopment of farms (e.g. As Germans occasionally did in the last century or as Ireland is doing to Bulgaria, Spain, Poland, Ireland... and Germany now) , but if someone from Poland, Bulgaria, Germany or elsewhere has the money to invest and ability to pull crop yields out of Irish farms to justify 5 to 40 times the price of farmland in their home economy, more power to them. The Irish government should pave their way towards making County Clare the breadbasket of Europe.

indiewindy

Interesting report from George Lee on RTE radio just before 6 pm, apparently there may be 3 more interest rate rises on the horizon. Looking forward to Marc Colemans spin on falling prices in the Irish Times on Friday:D

Kipperhell

5 months on from this thread being started makes me wonder if all the doom and gloom being spoke about has come true. As far as I can see the answer is simply no!
Nothing that could be called an actual slump in the market has happened. Prices have gone down but that is not a slump. I personally believe the stamp duty issue being resolved shortly will have a big effect and I doubt that it will cause prices to drop when it done.
How long now before there will be a 40-50% drop from 12-06?

SimpleSam06

dochasach wrote:

but if someone from Poland, Bulgaria, Germany or elsewhere has the money to invest and ability to pull crop yields out of Irish farms to justify 5 to 40 times the price of farmland in their home economy

Possibly some farmers from Afghanistan... Or Colombia...