Are You Hoping For a HUGE property price drop?

anotherlostie

I was just curious as to how many people who post, and in particular make the negative baying posts about the market crashing, are people who have not yet bought their own home?

I have a friend who has been predicting the crash for as long as David McWilliams. Like most of his peers, he could have bought a house years ago, and see it appreciate significantly over time. But no, the market was going to crash (and he would, we felt, revel in our difficulty when it did).

Now he is on hi-doh because of the crash. He still hasn't got his own house, but it will be cheaper to buy now! Never mind the difficulty that those with the 100% mortgages in negative equity will face, he is DELIGHTED at being proved right. His friends? Well they generally have loan to value ratios of less than 50% because of the market appreciation in 5-6 years. But we'll still have to listen to the rants!!!

gurramok

Well, i don't have my 'own' home yet and i would be one of those bears.

Thing is, you'll find a good few who already own their own places would have the same views as me.
Ironically, some of those who bought in the boom as 'getting on the ladder' in nick of time seem to want the whole bubble to hold up plus some of them goad at others who 'missed the boat'
People with 100% mortages on overpriced houses did not have a gun put to their heads to buy, not our fault if prices go down, its called economics.
And if prices do collapse and there are people stuck in negative equity, they are victims of the bubble as much as those that cannot afford their own home right now, no glee is appropriate in either situation.

miju

not being funny with you anotherlostie but there seems to be a bit of arrogance in your post about getting on the ladder etc. anyways, to best answer your question about mostly renters being the "cheerleaders of gloom" per se i created this poll quite a while ago which is here

I think the results speak for themselves TBH

I own property and am bullish , 18.70% (43 votes)
I own a property and am bearish , 36.09% (83 votes)
I do not own property and am bullish , 7.83% (18 votes)
I do not own property and am bearish , 37.39 (86 votes) - actually BIGGER number of votes than non home owners

um7y1h83ge06nx

Well I own a house so a huge crash is a no for me.

However if I was looking for a house to buy, I still wouldn't want a HUGE drop.

Why? Well a really huge drop in my mind would need a lot of things to screw up at the same time. One of the main things to drop house prices is unemployment, if people end up on the dole they can't pay for existing mortgages or obtain new ones.

Seeing as I am in the private sector I could be one of those put on the dole. Of course if I was in public sector employment it would be a different story entirely! Those lucky b*astards!

So really people should be careful for what they wish for. Cheap houses but no jobs still equals no house.

I'm no expert but that's how I see it.

Firetrap

I'm one of those people who can't afford to buy anywhere at the moment so it would be lovely to nip in and buy my dream home without having to live on beans and toast for the next 30 years. I believe houses are overpriced, that we were/are in a property bubble and that it's no harm that prices are going back a bit. There are a couple of graphs in the other thread showing that over the last few years, a large bulk of houses being bought were by investors rather than FTBs and that people who were buying them were on high earnings.

Having said that, I think if prices did drop that much, it would mean that the economy was gone to pieces and that we all were in trouble. The bigger picture is the one which over-rules my pipe dream.

gurramok

Adeline Magnificent Ginseng wrote: »

Well I own a house so a huge crash is a no for me.

However if I was looking for a house to buy, I still wouldn't want a HUGE drop.

Why? Well a really huge drop in my mind would need a lot of things to screw up at the same time. One of the main things to drop house prices is unemployment, if people end up on the dole they can't pay for existing mortgages or obtain new ones.

Seeing as I am in the private sector I could be one of those put on the dole. Of course if I was in public sector employment it would be a different story entirely! Those lucky b*astards!

So really people should be careful for what they wish for. Cheap houses but no jobs still equals no house.

I'm no expert but that's how I see it.

Supersonic, a huge drop in prices won't make everyone to be on the dole, there will still be about 2million employed

If your job in construction\finance\retail related, you would have valid worries that you could be part of a minority in that sector with unsecure employment, i emphasise minority as the above jobs are still needed, not as many of them as before.

Cheaper house prices will mean you can trade up cheaply, a no brainer.
And it will help FTB's buy again so construction jobs will be sustainable when that happens.

Its not all that doom and gloom

mastermind2005

id say our housing market will be similar to a river leading to a waterfall. were at the point where the water is just starting to speed up....

There is a complex of appartments in donabate with 13 available for sale at the moment, all around €250-€255, there is one with the title "Priced to sell" and is listed with an asking price of €220.... the add has been unedited for the last 177 days which is over 5 months.

Cantab.

miju wrote: »

not being funny with you anotherlostie but there seems to be a bit of arrogance in your post about getting on the ladder etc. anyways, to best answer your question about mostly renters being the "cheerleaders of gloom" per se i created this poll quite a while ago which is here

I think the results speak for themselves TBH

I own property and am bullish , 18.70% (43 votes)
I own a property and am bearish , 36.09% (83 votes)
I do not own property and am bullish , 7.83% (18 votes)
I do not own property and am bearish , 37.39 (86 votes) - actually BIGGER number of votes than non home owners

Good man miju.

Electric

Honestly I would love a good drop in prices so I could afford my own place. I can't right now. But on the other hand I know loads of people who bought and are now struggling cos of the interest rate increases etc. I would hate for all of them to be in dire straits if prices dropped loads.

But I would love to own a home.

Ahhh feels like an angel on one shoulder saying no don't drop think of all those people who will be in trouble. And a devil on the other going drop drop drop then you could get a nice house for a killing muhahaha (evil laughter)

Zambia

Hmm

Chances are what will/has drag down the price of property is over supply and a tightening of bank borrowing.

So a house may fall to a steal at 250,000 yo yo but if no bank will lend you the difference then your still buggered.

I sold before the crash in the republic , but the UK slump is doing me no favours either. Folk are not even viewing houses up north.

I would be in favour of a return to a spot where people can buy and sell houses again. Which in all probablity is when market confidence is restored.

Mint Sauce

Electric wrote: »

But I would love to own a home.

Ahhh feels like an angel on one shoulder saying no don't drop think of all those people who will be in trouble. And a devil on the other going drop drop drop then you could get a nice house for a killing muhahaha (evil laughter)

kinda feel the same, would love my own place, decorate it as i like, not having to worry about desturbing my house mates when crashing in at 4 in the morning, etc, was in a position a few years ago to maybe get a property and a 100% mortgage was available to me, would have not opted for this and would have gone with a 80% one, basicaly didn't want to be owing the bank more than i had to

since this first look into the property market a few years ago a change in my circumstances led to having to take a pay cut and moving to where on average property is 10 to 20 thous more expensive, although kinda considering my options at present and looking at the market again, so kinda glad to see this drop, means i may get some where cheeper, although it means hitting it at the right time when prices stabilise and show an increase again

although feel for those who took up the 100% offer and face negative equity, and end up owing the banks more than what the property is worth should they be forced to sell

SkepticOne

anotherlostie wrote: »

I was just curious as to how many people who post, and in particular make the negative baying posts about the market crashing, are people who have not yet bought their own home?

I have a friend who has been predicting the crash for as long as David McWilliams. Like most of his peers, he could have bought a house years ago, and see it appreciate significantly over time. But no, the market was going to crash (and he would, we felt, revel in our difficulty when it did).

But at the same time, fair play to him and others for this "negative baying", most of which has occurred in the last 18 months, the very top of the market. Because of this, many people were alerted to a dangerously overheated market and can avoid negative equity in some tiny apartment with no sound insulation that nobody will buy.

I think at this stage a huge drop is inevitable. Whether you hope for one is irrelevant. The only question is whether the government will drag it out over many years with incentives to buy thereby maximising the damage to the economy (most likely, unfortunately) or whether it will be a short sharp correction with a quick recovery (unlikely).

miju

Adeline Magnificent Ginseng wrote: »

Why? Well a really huge drop in my mind would need a lot of things to screw up at the same time.

not really. the current credit crunch and rising interest rates where the starting point of this "slump" not unemployment rising etc. Even in a massive housing slump jobs will still be created , money will be going about te economy.

the only difference between now and when the base rates were at 2% is that the tap of cheap credit has been turned off and thats really whats been driving the economy since about 2001.

as the man once said "we'll soon see who's swimming naked when the tide goes out"

The_Conductor

I own my own townhouse in Lucan village- I am dying for prices to tumble- I want to move- the way I look at it, while my own home is falling in value, so too are the houses with nice gardens that I'm interested in, and one offsets the other- at the end of the day, the only looser will be the Revenue Commissioners in so far as their take on my sale price and purchase price will both be fractions of what they would have been........

Negative equity is irrelevant, when you need a roof over your head.

patrickolee

You'll be waiting a long time to get out of your house in Lucan if there is a crash... these things take years to play out. Or you could take the leap of faith and hope you don't get caught in a chain and end up with two deflating properties! A crash is good for no-one, including renters.

miju

please enlighten us as to why a crash will be good for no-one because I see a crash as being good for a large proportion of the population and Irelands economy in general.

as for the crash not being good for renters. i really would love to hear your reasoning on that one as if anything it's helping renters particularly if last weeks CSO figures are anything to go by which showed rents decreasing

dazberry

I looked at buying a place in 1997 - didn't in the end. I'm still not in the market, but the big difference is that while I could have in 1997, more recently I haven't stood a chance of getting near anything. I don't expect to get back to 1997, and things have softened enough that I could realistically get something if I had to. So yes, on a selfish level I want to feel that I have some options - if ever I have to.

On the other side of that a lot of my friends did buy in the late 90s, and have subsequently remortgaged a number of times for second and third properties. Some have made pretty bad decisions (IMO as someone very bearish) and I don't want to see them get into difficulties. Its likely they will.

Also, as someone who had a pretty rough time during 2002/2003 with the IT crash - I know what its like to suddenly not have a job (regardless of skill and ability) - and having a period of time eeking a miserable living with not a lot of prospect in getting things back on track. So I do feel for the people that are losing their jobs - there is a human level to this and it isn't nice.

But... I have felt that property has become like a tumour, pulling investment in the wrong direction to feed itself. This honestly really needs to change. The question is - is it a short sharp correction, a long sharp one or a long slow one - I don't know, realistically I don't think anyone really does. It'll unwind itself in its own way...

D.

mikemac

I'm in a position to buy now, have a good sized deposit saved up and a secure, pensionable job.
I came very close to buying in April 2006, when I admit I got caught up in the hype but pulled out and kept my FTB status.

Roll on the property crash, I'll never qualify for social housing with the council and I'm not rich enough to buy some Section 23 that seem to exist for millionaires to write off tax.
I'm only an ordinary person on a pretty decent salary so it's my only option.

Like most people I have several friends who bought in the last 2 years. Some bought in commuter towns and some bought in what I would consider "undesirable" locations.
And call me cruel if you want but I don't realy care if they are forced into negative equity. They wanted a home to live in so once they keep up their mortgage payments, nobody can touch them.

I'm hoping the goverment isn't going to use my money and your money too to bale overstreched property investors, ie buying up overpriced homes for social housing when it'd be cheaper to let the council build them.
Sure if I put €250,000 in shares on the stocket market and lost most of it noone will bale me out so why the difference is someone owns two or more homes?

The_Conductor

micmclo wrote:

Sure if I put €250,000 in shares on the stocket market and lost most of it noone will bale me out so why the difference is someone owns two or more homes?

Unless you're an ex- Telecom Eireann/Eircom employee.......

Re: problems off-loading my own property in Lucan village- the HSE have offered to rent it from me should I ever decide to make it available (their office is next door, so I don't know whether they mean as office space (it has dual-zoning) or as accommodation. I could afford to remortgage it and let it out on a long term lease, it would save my trouble in selling it. I didn't buy it in the last year or two- so market rent wouldn't put me in conflict with repaying the mortgage on it (unless rent yields slumped massively, which is possible, but unlikely).

Personally I do think that councils buying up second hand properties, as affordable housing, particularly in a falling market, is pretty stupid. I do think that a scheme akin to that recently implemented in Spain- where zoned land had to be developed and completed within a timeframe or else it reverted to the council (give them a reasonable timeframe- say 5 or 7 years) would be far more preferable. It would do away with massive landbanks in the hands of developers/speculators, and also with purely spurious valuations on the basis of zoned tranches......

Time will tell.

amtc

I absolutely agree with the original poster. I live in a development in commuter Dublin and have seen prices fall, yet still above what I paid 5 years ago. So what, on paper last year I could've made a profit of 1/2 million but I would still have had to live somewhere, and I love my place and don't intend to sell. Yet a guy in work keeps on about how wrong I am and how I could be in negative equity - I'm not 40 and living with my parents, mate! So he has a healthy bank balance but I have a real home that I love.

anotherlostie

I didn't mean to come across arrogant, it's just that I find that in order to the get the point across to some of the harbingers of doom, you have to call it like it is.

Ultimately what I was asking was different to being a bear or a bull. I've noticed a number of people here (and on another non-boards forum I post on) who (on some threads) almost seem to be foaming at mouth with joy at the thoughts of properties crashing, and I guess I find this distasteful.

miju

anotherlostie wrote: »

I didn't mean to come across arrogant, it's just that I find that in order to the get the point across to some of the harbingers of doom, you have to call it like it is.

Ultimately what I was asking was different to being a bear or a bull. I've noticed a number of people here (and on another non-boards forum I post on) who (on some threads) almost seem to be foaming at mouth with joy at the thoughts of properties crashing, and I guess I find this distasteful.

why are people who post "negatively" about the housing market "harbingers of doom"? i'd be very interested in your explanation for your rationale of thinking behind that one.

you seem to think price drops are bad for this economy. it's not. the amount of investment cash getting sucked into property and this countries obvious over reliance on the contruction & property sector (both employment & state finances) is basically a train wreck waiting to happen.

the sooner this madness comes to an end (and it seems to be) the sooner that money actually starts being pumped into Irish companies and making this countries economy truely resilent & strong.

thats not taking into account the personal reprecutions from this property bubble that has people commuting for up to 4 hours a day and spending **** all time with their families and so forth.

I have to ask you a direct question actually. what is good about constantly rising and high property prices?. I strongly suspect you won't be able to come up with anything solid.

/end rant

mikemac

anotherlostie wrote: »

I didn't mean to come across arrogant, it's just that I find that in order to the get the point across to some of the harbingers of doom, you have to call it like it is.

Ultimately what I was asking was different to being a bear or a bull. I've noticed a number of people here (and on another non-boards forum I post on) who (on some threads) almost seem to be foaming at mouth with joy at the thoughts of properties crashing, and I guess I find this distasteful.

Miju has already made good points especially regarding commuter towns.

I don't know if you're a home owner or not OP but if you've made a massive "paper" profit on your home so far, then so what?
A more desirable home above yours has also increased and you're no nearer to getting it. In fact, for example if a starter home goes up 50% but a more desirable house (next step up) also goes up 50%, then you are actually worse off.
Plus to sell your overpriced house, some poor sucker may be getting hit with a 30 year plus mortgage with rising interest rates.

As in my last post, I don't want to see my friends trapped in negative equity in some commuter town or some inner city skanger infested complex.
But it was their choice and if they became property millionaires in a few short years as many Irish people did they would have no hesitation in looking down on suckers like me paying "dead money" to a landlord.
But if the tables turn, I become a harbinger of doom?

iguana

I nearly bought a house in Dublin in mid-2004 and it's now obvious to me that I'd get the same house cheaper now. And we are only at the beginning of the crash. I have friends who bought in 2003 who are planning to sell soon and if they do will still walk away with a good profit, but I wouldn't fancy their chances if they hold off another year or two.

I did buy a house in London last year which saw a 30% rise since I bought it, based on an offer my neighbours had on their house last week. But I think the boom may be over here too and it will only take a 22% drop for us to be back where we started. Remember, it only takes a 50% drop to lose a 100% gain.

As far as personal gain is concerned I would like to see a huge drop in Dublin and a huge rise in London. But the likelihood is that we will see huge drops in Ireland and fairly significant drops in the UK.

Do I feel sorry for people in negative equity? Absolutely. I have a couple of friends who, imo, have bought disastrously in the last 2 years. And I'm sure they'll feel sorry for me if I str and then watch the value of my old house continue to rise. (Though some will think I was a huge fu*king tit.) On the other hand I don't feel sorry for those who got greedy or blatantly stupid. I know people who own investment properties where they make negative yields on a depreciating assets and still think their best bet is to hold on to it for 10 years because it will have risen in value again by then.

But at the end of the day we are all adults who have the same information available to us, and we all have to live with the consequences of what we decide. If we choose different paths some will come out better than others - that's just how it goes.

anotherlostie

@ muji. What is good about house prices crashing very quickly as some people are hoping for?

We have the prices we have now. There has been a lot of inward migration into Ireland, and those people will need to buy homes (of course many already have) And as Ireland's civil service pays increasingly larger salaries, people will move up this scale, and they will be able to afford to buy.

@micmiclo, I traded down 18 months ago, so you do not need to worry about me.

So What is good about house prices crashing very quickly as some people are hoping for? What will you get out of it, other than possibly a repossessed home that caused someone else a great deal of misery?

The_Conductor

anotherlostie wrote:

We have the prices we have now. There has been a lot of inward migration into Ireland, and those people will need to buy homes (of course many already have) And as Ireland's civil service pays increasingly larger salaries, people will move up this scale, and they will be able to afford to buy.

First of all- under Towards 2016, the pay rises accorded to the Civil Service and the Public sector are actually considerably below the rate of inflation- so not only will those civil servants not be able to buy- they will be poorer in real terms than they are now. The numbers of civil servants has fallen by almost 20% in the last 12 years, and most government departments continue to reduce in size (mostly through non-replacement policies for people who die or retire). So- I think your hypothesis about civil servants buying homes is a bit odd. Note: the public sector is a very different animal from the civil service (particularly when you factor in the 210,000 workers in the HSE........)

As for the inward migration into Ireland- the vast majority of it is from Eastern Europe, and is temporary in nature. Very few of the migrants have any great intentions of laying down routes here- they are here for economic reasons, and as soon as those economic reasons change they will move elsewhere. Witness the estimated 8,500 construction workers from Eastern Europe who the CIF estimate have moved to London from here since the beginning of July- as the slowdown continues to bite, this stream could well turn into a torrent. London are doing a lot of infrastructural construction for the olympics and will be for the next few years- and there are long standing immigrant groups over there where next to nothing exists here.

A distinction really has to be drawn between those who are true migrants, and those who are temporarily here for economic reasons. Unfortunately for the Irish housing sector, and particularly the rental market- a lot of our net inward migration in recent years is the latter category.

anotherlostie wrote:

So What is good about house prices crashing very quickly as some people are hoping for? What will you get out of it, other than possibly a repossessed home that caused someone else a great deal of misery?

How about easier transactions through lower stamp duties which are an impediment to people trading up and down in the market place? As for repossessed homes- it won't be as much a problem as it was elsewhere- for the simple reason we never really had much of a sub-prime market here- it was vastly main-stream lending. Also- bankruptcy laws here are a lot worse than elsewhere. In the States you can declare yourself bankrupt and walk away from you debts. Here you have a perpetual noose around your neck- the bank can garnish your earnings and even your pension contributions towards covering their lending on what is a depreciated asset. It really is a case of the lenders being favoured in the eyes of the law, over the consumers. By rights there should be reform of both stamp duties and also the bankruptcies laws. Perhaps the banks would be a little more risk averse then- when their crap lending policies actually begin to hurt them....... All they're moaning about at the moment is erosion of margins. So what!

miju

anotherlostie wrote: »

@ muji. What is good about house prices crashing very quickly as some people are hoping for?

i already answered why. i do note however the only answer you've given to me is to ask another question.

i'll try again. whats good about high and / or constantly rising house prices ?

Paulw

It's interesting really. Many people want house prices to crash, but fail to realise that if that happens then the whole economy will be hit too.

I bought a while ago, and the value of what I bought has certainly gone up. I can certainly see prices dropping a bit, maybe 5-15% in the next 5 years, and that is fine with me.

Those who bought and live in their place can't keep thinking about things. You live there so no matter what the value of the place you still have to pay the mortgage.

A lot of people who want prices to crash are those who can't afford a mortgage. They're jealous of those who did have sense to buy before it peaked.

miju

Paulw wrote: »

It's interesting really. Many people want house prices to crash, but fail to realise that if that happens then the whole economy will be hit too.

But what people like yourself fail to see is that the longer this goes on the worse the inevitable fall and blow to the economy will be. Yes there will be short term pain and the economy will definitely take a knock.

The whole economy wont be hit though, mainly just retail and construction which we are far to heavily reliant on anyway. So the sooner this is over and done with the better and we can get the economy back onto an even keel. Despite what alot of people here a country can't get rich just by selling houses to each other indefinitely as we're finding out now.

Paulw wrote: »

A lot of people who want prices to crash are those who can't afford a mortgage. They're jealous of those who did have sense to buy before it peaked.

sorry but I'm certainly not jealous of anyone who is tied to a 35 year mortgage. This is just another cliched phrase that someone comes out with to try and brush off someones valid point.

BTW I can afford a mortgage now if I want and me & the missus will have a significant deposit of 60k sitting in our bank accounts by year end so jealously has nothing to do with it.

Uuuh Patsy

miju wrote: »

BTW I can afford a mortgage now if I want and me & the missus will have a significant deposit of 60k sitting in our bank accounts by year end so jealously has nothing to do with it.

I'm not sure I understand why anybody who is planning on living in this country for the rest of the life's, and not just investing would prefer to pay their landlords mortgage rather than their own. Is it more of a commitment issue than financial one. Either way theres no cheap way of putting a roof over your head.

If things do drop and you find yourself in trouble, hand back the keys and tell them to send the solicitor letters to "no 1 no fixed abode way"

iguana

anotherlostie wrote: »

@ muji. What is good about house prices crashing very quickly as some people are hoping for?

We have the prices we have now.

Right, so we have a situation where couples on decent salaries have to borrow 6 times their combined gross salaries on a 100%, io, 35-40 year mortgages to buy a horrible little houses off the plans a 3 hour round trip from their jobs. The majority bought when borrowing was cheap and now that it is no longer cheap their budgets have stretched to the point where they can't afford to have children. (Not can't afford to have one parent stay home to raise their child - actually can not afford to pay for childcare must remain childless.)

Do you honestly think that is better than a situation where people can afford to buy a property relatively local to their work and families on a 25 year, 90% repayment mortgage, which can be serviced by one salary or at least allow two working parents to afford childcare?

Uuuh Patsy

iguana wrote: »

Right, so we have a situation where couples on decent salaries have to borrow 6 times their combined gross salaries on a 100%, io, 35-40 year mortgages to buy a horrible little houses off the plans a 3 hour round trip from their jobs. The majority bought when borrowing was cheap and now that it is no longer cheap their budgets have stretched to the point where they can't afford to have children. (Not can't afford to have one parent stay home to raise their child - actually can not afford to pay for childcare must remain childless.)

Do you honestly think that is better than a situation where people can afford to buy a property relatively local to their work and families on a 25 year, 90% repayment mortgage, which can be serviced by one salary or at least allow two working parents to afford childcare?

A property crash isn't the solution to this. Controls over the lending practices of the banks is the solution to this. This situation was always going to occur and can never go back due to the fact that we now have working couples being assessed. Back in the day when my father bought our house, his mortgage was assessed on his salary only. So no matter what happens, single earners are never going to compete with joint earners. Stop joint assessment now and make the property market family friendly. No hope. Money talks and greed is always going to win out

iguana

Uuuh Patsy wrote: »

A property crash isn't the solution to this. Controls over the lending practices of the banks is the solution to this.

And what do you think would have happened if tighter controls had been implemented in the first place? Prices would never have risen like they did. The average buyer isn't massively overstretching themselves to buy a D6 mansion. They are buying the cheapest thing they can afford. And the prices of nondescript 3-bed semis in Mullingar are so high because the banks were lending so much money.

Now that the banks are lending less money property prices are coming down. That's not much good to the people who have bought over-priced houses, but hopefully we will have a better situation for future buyers.

Uuuh Patsy

iguana wrote: »

Now that the banks are lending less money property prices are coming down. That's not much good to the people who have bought over-priced houses, but hopefully we will have a better situation for future buyers.

Because they haven't changed the practice, its only a matter of time before they start dishing it back out, and when property drops by a certain level, the rental market will become that bit more attractive again and the investors will come back again. Either way, theres no going back. Its a lull, might last a few years but, a lull all the same.

The_Conductor

Uuuh Patsy wrote:

when property drops by a certain level, the rental market will become that bit more attractive again and the investors will come back again.

Property will have to drop by 30-35% or rents increase by ~60% before investors will consider it a viable investment. Rents are not going to increase that much- but a 30-35% decrease in property prices is very possible.

S.

miju

Uuuh Patsy wrote: »

I'm not sure I understand why anybody who is planning on living in this country for the rest of the life's, and not just investing would prefer to pay their landlords mortgage rather than their own. Is it more of a commitment issue than financial one. Either way theres no cheap way of putting a roof over your head.

If things do drop and you find yourself in trouble, hand back the keys and tell them to send the solicitor letters to "no 1 no fixed abode way"

This post explempifies your naiveity a good bit. First off, in Ireland you cannot simply hand back the keys.

Secondly, despite the mantra of "rent is dead money" that permeates through this country its actually not. Fact of the matter is that it's currently a hell of alot cheaper to rent than to buy. We saved our deposit in just under 3 years while renting and we're both pretty much on the average wage. If we bought we wouldn't be able to save as much as that in 5 years let alone 3.

Fact of the matter is the interest on todays mortgages is much more a waste of money than renting.

miju

Uuuh Patsy wrote: »

This situation was always going to occur and can never go back due to the fact that we now have working couples being assessed.

I actually beg to differ. the situation could have been avoided and as for can't go back. Well I think you'll find that they can and quite drastically too. There are many previous property bubbles which explempify this but most current is the US housing price crash.

Also, interesting to note during this that employment is remaining somewhat "steady". Like I said before prices coming down aint the end of the world

Electric

smccarrick wrote: »

First of all- under Towards 2016, the pay rises accorded to the Civil Service and the Public sector are actually considerably below the rate of inflation- so not only will those civil servants not be able to buy- they will be poorer in real terms than they are now. The numbers of civil servants has fallen by almost 20% in the last 12 years, and most government departments continue to reduce in size (mostly through non-replacement policies for people who die or retire). So- I think your hypothesis about civil servants buying homes is a bit odd. Note: the public sector is a very different animal from the civil service (particularly when you factor in the 210,000 workers in the HSE........)

SMcCarrick is right just because you work in the public/civil service doesn't mean that you are sitting on wads of cash and able to afford a house at the drop of a hat.

I work in the public service and certainly can't. Now don't get me wrong I'm not saying that I am underpaid or anything. I have a comfortable wage but not so comfortable that I could afford to buy a house.

I have tried mortgage approval and what I would be approved for wouldn't buy anything anywhere!

So yeah would love to see a huge price crash but not so much that it would see repossessions and people being evicted because their repayments have become ginormous

Uuuh Patsy

smccarrick wrote: »

Property will have to drop by 30-35% or rents increase by ~60% before investors will consider it a viable investment. Rents are not going to increase that much- but a 30-35% decrease in property prices is very possible.

S.

Well if I know old school Irish people with money, I know one thing. When push comes to shove they'd rather buy land or property where they can see it. Maybe even hang onto it forever. Its genetic. Beat into us by the Brits. I'd rather own a house then bung into Northern Rock

Uuuh Patsy

miju wrote: »

I actually beg to differ. the situation could have been avoided and as for can't go back. Well I think you'll find that they can and quite drastically too. There are many previous property bubbles which explempify this but most current is the US housing price crash.

Also, interesting to note during this that employment is remaining somewhat "steady". Like I said before prices coming down aint the end of the world

Well I think fluctuations will occur in much the same way as the stock markets as property is now being traded in much the same way as stocks and shares. But I think property will always win out as the safest bet. And the US is a big place. There are economies in different states bigger than ours. So its not comparable to compare the US with Ireland without being specific.

miju

I am being specific all across the US house prices are slipping.

bobzi

Paulw wrote: »

A lot of people who want prices to crash are those who can't afford a mortgage. They're jealous of those who did have sense to buy before it peaked.

Plenty of people who had the sense to buy before it peaked are now or will soon be in negative equity as house prices continue to fall. The smart ones are the people who sold before the peak.

Im glad the inevitable crash is happenning now as Im only a couple of years out of college so didnt have a chance to buy before the boom. I feel sorry for ordinary people who bought in the last few years believing all the BS from the banks / property industry that prices would keep increasing

Pa ElGrande

Paulw wrote: »

It's interesting really. Many people want house prices to crash, but fail to realise that if that happens then the whole economy will be hit too.

Construction is not the whole Irish economy, there is the part of the economy that serves the export markets. However, you are likely to be correct, the boom has largely been a result of loose credit conditions that fed a global property boom so most of the markets we export to will likely experience reduced demand for credit. A global recession (or at least Anglo-American) is a real possibility, since debt can't be expanded beyond the productive capacity of an economy forever.

Paulw wrote: »

I bought a while ago, and the value of what I bought has certainly gone up. I can certainly see prices dropping a bit, maybe 5-15% in the next 5 years, and that is fine with me.

Prices have already dropped 20% in some areas.

Paulw wrote: »

Those who bought and live in their place can't keep thinking about things. You live there so no matter what the value of the place you still have to pay the mortgage.

Absolutely, as long as you can service the debt, does it matter if house prices go down? Well yes it does, if your income is being squeezed to the extent you are unable to build up savings. A mortgage is a bet on your future earnings, which may rise or fall depending on conditions in your chosen profession. But with so much of your and many others future income tied up in their houses how are we going to fund the next generation enterprises? Are you really prepared to take a loss on your house if a new job offer comes up on the other side of the country.

Paulw wrote: »

A lot of people who want prices to crash are those who can't afford a mortgage. They're jealous of those who did have sense to buy before it peaked.

Why Jealous? They are simply priced out, they have resigned themselves to sit on the sidelines or take on crippling debt. These people are looking for security in their lives to start families and be part of a stable community, the rental sector is on the whole not stable enough to enable any long term planning much to the detriment of both investors and tenants. In years to come the post 2000 housing boom will be seen as the greatest mistake we as a nation ever made, most of our future earnings are essentially 'dead money' in that we have eaten tomorrow's bread today.
One door closes and another opens, house prices falling to an affordable level is good for the country's future, its good for families future's, its good for our global competitiveness and it should be welcomed in that spirit.

Firetrap

Paulw wrote: »

A lot of people who want prices to crash are those who can't afford a mortgage. They're jealous of those who did have sense to buy before it peaked.

That's a bit harsh, is it not? Prices have been rising so quickly that a lot of people were priced out of the market. If I had been on my current salary five years ago, I'd have a really nice house now and I wouldn't give a toss about prices going up or down because I'd be planning on living there for years and wouldn't be stretched too badly with mortgage repayment. Unfortunately, this isn't the case now and I would love for prices to come back down. Ordinary people have been priced out of the market. You can call us bitter or jealous or whatever. I think we've been badly let down. By whom exactly I'm not sure but the bottom line is, there are a lot of us out there on good money who can't afford to buy our own places. That's what houses are for, are they not?

Paulw

Unfortunately, a lot of our economy is linked to construction. If house prices fall, building slows down, then our whole economy will be hit. Then wages will fall, unemployment will increase, house prices will then crash.

This will not be good for anyone - even those hoping house prices crash, since if that happens, your salary will still not be enough to afford a mortgage.

The best thing would be for the govt to assist with mortgage interest relief, rather than lowering/removing stamp duty.

I have no real idea what my property is worth. I don't care as I have no plans selling any time soon. I am paying off my mortgage, and I can manage. I am not scraping the bottom of the barrell, nor am I living the high life. But, no matter what happens to the value of my place - I live there, so I must continue to pay the mortgage.

Many people held off buying for the first year or two when prices started to increase because they believed prices would drop. But over 5+ years prices increased and increased. If I had bought at the start (which I could have if I really tried) then I would be laughing. But, I waited and waited. I did buy well before things peaked though, because I could see prices rising further.

People really do need to see that a property value crash will not simply lower prices, but it will have a very major impact on the rest of the Irish economy and our whole way of life.

Pa ElGrande

Paulw wrote: »

Unfortunately, a lot of our economy is linked to construction. If house prices fall, building slows down, then our whole economy will be hit. Then wages will fall, unemployment will increase, house prices will then crash.

Present tense - House prices are falling now, building output is falling, our domestic economy is being hit, the number of hours worked by construction workers is falling, so are their wages, unemployment is increasing, house prices are crashing.

Paulw wrote: »

This will not be good for anyone - even those hoping house prices crash, since if that happens, your salary will still not be enough to afford a mortgage.
The best thing would be for the govt to assist with mortgage interest relief, rather than lowering/removing stamp duty.

People should be careful what they ask for, remove stamp duty and there are other property taxes such as rates that can be introduced.
Increasing mortgage interest relief simply allows the banks to lend more money that they would have been able to due to interest rate rises. Government has little scope to cut taxes for the next few years and its actions will only draw out the problem.

Paulw wrote: »

I have no real idea what my property is worth. I don't care as I have no plans selling any time soon. I am paying off my mortgage, and I can manage. I am not scraping the bottom of the barrell, nor am I living the high life. But, no matter what happens to the value of my place - I live there, so I must continue to pay the mortgage.

Many people held off buying for the first year or two when prices started to increase because they believed prices would drop. But over 5+ years prices increased and increased. If I had bought at the start (which I could have if I really tried) then I would be laughing. But, I waited and waited. I did buy well before things peaked though, because I could see prices rising further.

Everyone makes decisions as an adult (we hope). I can say with certainty for most property, there is no scope for further price rises in the next five years and in fact there will be substantial falls (real and nominal), due to oversupply of housing units and self-reinforcing negative price feedback cycle and rising unemployment. On average I expect 30% nominal falls.

Paulw wrote: »

People really do need to see that a property value crash will not simply lower prices, but it will have a very major impact on the rest of the Irish economy and our whole way of life.

The Irish economy will not stop because of falling house prices. What we were doing was unsustainable and it was always going to correct, we cannot continue to build a whole way of life based on taking on increasing amounts of debt without the matching wages. House prices are now a secondary concern to rising energy prices which are feeding into rising prices for low order goods across the board.

patrickolee

Pa ElGrande wrote: »

Increasing mortgage interest relief simply allows the banks to lend more money that they would have been able to due to interest rate rises.

It would also assist people who have very large mortgages and perhaps approaching negative equity, but not investors. Would that not be a good thing?

The_Conductor

patrickolee wrote: »

It would also assist people who have very large mortgages and perhaps approaching negative equity, but not investors. Would that not be a good thing?

Aka- people who borrowed far more than they should have done, without due regard for having a minimum comfort zone should interest rates increase.

What happened the last time the government caved in to this group of people and increased mortgage relief- interest rates went up 10 days later and the benefit of the relief was wiped out overnight.

Current comments indicate that the ECB is far more interested in its direct mandate- to keep inflation under 2%, than to stop the European economy imploding (there are a discussion of Axel Weber's comments last week in the Housing Bubble thread). It is a reasonable assumption that there are another 2 rate increases on the cards, possibly more- as EU inflation has been stubbornly above the 2% mark for several months running. The ECB are *not* going to bale out the Irish/Dutch/Spanish/Portuguese/Greek housing markets- its not in their direct interests to interfere. Unfortunately governments have interfered- which is what prolonged the mess in the first place.

We are all hurting from higher interest rates- we got used to cheap credit and over stretched ourselves. Now we must tighten our belts and get on with trying to clear our hangover after the credit party. It is going to be messy- it is going to hurt like hell, but it is necessary. Hopefully we all learn a few lessons from it for the future.

Merrion

The Irish economy will not stop because of falling house prices.

In the longer term falling house prices will be very good for the Irish economy as it will encourage investors to look beyond bricks-and-mortar which will increase the amount of investment available to new business start-ups which will result in a more diverse and exporting economy.

iguana

Paulw wrote: »

Unfortunately, a lot of our economy is linked to construction.

Which is completely and utterly unsustainable. It is reasonably estimated that 1 in 6 residential properties in Ireland are empty. The building industry as it currently exists is over. Maybe once the crash is well under way they can start knocking the crap they have built over the last decade and build decent houses and proper apartments.

seamus

Firetrap wrote: »

Unfortunately, this isn't the case now and I would love for prices to come back down. Ordinary people have been priced out of the market.

This is one thing which we have waiting in the wings which I believe will end up stabilising the market after a serious fall - pent up demand.

Many people who would/will buy were priced out of the market, which is what caused the abrupt halt to house sales at some point late last year. We hit a point whereby the cost of buying a home remotely close to where people wanted to be, was just out of reach for new entrants to the market. With nobody joining the ladder, those who wanted/want to trade up had no-one to take their home and the whole thing ground to a halt.

Those looking for somewhere to buy have to go somewhere - so we saw the rental market take the push. Renting in Dublin is now a nightmare - rents are high and rising quickly and even getting a place to begin with is tough.
So while this continues, and as house prices continue to drop, the see-saw will go back the other way - we'll hit a tipping point where it will make more sense to pay €1400 a month to buy a decent-sized home, than paying the same money to rent a shoebox on James's St and demand will kick into the property market again, although at standard levels, not the stupid growth of years gone past.

FWIW, while I was skeptical about touching property until next year, we've found a place that we want to live and where we can get a mortgage for cheaper than renting, so I'll probably end up buying this year. I'm not really all that concerned about the price dropping - in fact I'm expecting to probaby lose about 30k in the short term, but break even in the medium term. I suppose it depends - the value of a home has to be counted in more than euros.