How long a downturn?

Teacherman

I presently have an unemployed wife so I'm wondering how long this downturn will be? I predict next year to be a write off and perhaps a pick up in 2010? Is that the general view or do others think it will be longer?

andrewdeerpark

Everything now depends on the american corporations staying put and not moving or downsizing to much.

The pillar of our economy is HP, Intel, Wyatt, Boston Sc, IBM, Microsoft, Google etc everything else is just BullS**t with us Paddy's screwing each other with property schemes etc

Arrive at May next year with almost all on board and we will be alright for 2010 recovery however we loose anything greater than 25% then all bets are off and a return of the 80's bekons with emmigration back on the agenda and the polish leaving flooding the market with unoccupied property, plus all those empty commerical office spaces / business parks will have birds for tenants and we will be paying a chunk of the 400billion guarantee.

We are far from out of the woods yet, but that's a worst case senario.

BenjAii

I think there are just too many "what ifs" to call this.

Chief among them is the US financial collapse; many commentators think that worse has yet to come (if that seems possible). Just how bad, who knows.

In Ireland its hard to believe, given all this, that our property bubble hasn't even begun to correct itself. If and when it does, that can only have a hugely negative effect on peoples disposable income and thus on so many other parts of our economy in retail/services.

As the previous poster pointed out, one of the things keeping our property bubble afloat is the huge influx of foreign workers occupying buy-to-let properties. You can only think there will be a lot less of them to do this soon & that will be another huge negative on property prices (or positive from the point of view of the next generation who want to get on the property ladder! - perhaps the one silver lining in all this).

the_syco

andrewdeerpark wrote: »

the polish leaving

Aye, and I see lots of Irish going with them

Some banker/economics dude on the TV on RTE said that the resession would probably happen till end of next year, before it starts getting better.

gurramok

We need this housing bubble to correct itself and sooner the better. In other countries, it has taken about 5 yrs on average so lets hope the govt don't intervene further hence prolonging it and let the thing correct itself.
If they don't, 2011 should be a start for a pickup but unemployment wil be nasty.

TheDude2008

It wont be a recession at all it will be a depression, Irealnd is based on nothing now, we dont have a competive advantage anymore, the last few years were based on a property buble thats all, we will be in a recession for 2008, 2009, 2010,2011,2012,2013,2014,2015 at least that many years so dont be fooling yerselves. And this is worse than the eighties , then we did not have 50,000 immigrants on the dole and rising and we ddnt have bogus refugees bleeding the country dry, and this year so far we still have had 112,000 immigrants arriving even when we are in recession and irish people loosing jobs. i have never seen such madness in all my life. we really ****ed ourselves over by leaving mass immigration into this country, and the myth that the immigrants will go home when there is no work has been proven as such a myth, they have not gone home thats why there is 50,000 of them on our dole at this moment. But of course some irish people were fooled by the bleeding heart pro immigraion people and now ye will pay for it so i fell no sorrow for Irealnd the people brought it upon themselves when they didnt opose mass imigration so now ye will suffer.

Princess Consuela Bananahammock

TheDude2008 wrote: »

It wont be a recession at all it will be a depression, Irealnd is based on nothing now, we dont have a competive advantage anymore, the last few years were based on a property buble thats all, we will be in a recession for 2008, 2009, 2010,2011,2012,2013,2014,2015 at least that many years so dont be fooling yerselves. And this is worse than the eighties , then we did not have 50,000 immigrants on the dole and rising and we ddnt have bogus refugees bleeding the country dry, and this year so far we still have had 112,000 immigrants arriving even when we are in recession and irish people loosing jobs. i have never seen such madness in all my life. we really ****ed ourselves over by leaving mass immigration into this country, and the myth that the immigrants will go home when there is no work has been proven as such a myth, they have not gone home thats why there is 50,000 of them on our dole at this moment. But of course some irish people were fooled by the bleeding heart pro immigraion people and now ye will pay for it so i fell no sorrow for Irealnd the people brought it upon themselves when they didnt opose mass imigration so now ye will suffer.

You sound like the Fred Phelps of immigration.

JimiTime

TheDude2008 wrote: »

It wont be a recession at all it will be a depression, Irealnd is based on nothing now, we dont have a competive advantage anymore, the last few years were based on a property buble thats all, we will be in a recession for 2008, 2009, 2010,2011,2012,2013,2014,2015 at least that many years so dont be fooling yerselves. And this is worse than the eighties , then we did not have 50,000 immigrants on the dole and rising and we ddnt have bogus refugees bleeding the country dry, and this year so far we still have had 112,000 immigrants arriving even when we are in recession and irish people loosing jobs. i have never seen such madness in all my life. we really ****ed ourselves over by leaving mass immigration into this country, and the myth that the immigrants will go home when there is no work has been proven as such a myth, they have not gone home thats why there is 50,000 of them on our dole at this moment. But of course some irish people were fooled by the bleeding heart pro immigraion people and now ye will pay for it so i fell no sorrow for Irealnd the people brought it upon themselves when they didnt opose mass imigration so now ye will suffer.

So the recession/depression is because of the foreigners. Great, torches and pitchforks all round, we're going to save our economy!

damnyanks

I think the biggest problems we will see are when our banks really suffer from the property bubble. The government will have to throw more money there way which could stop them spending money on developing local industry.

the_syco

TheDude2008 wrote: »

we dont have a competive advantage anymore

Blame this one on the unions, who want their people to have more. Wonder when the non-union people start to earn less, will the unions ask for cutbacks within their wage agreements? I think they'll still want more.

TheDude2008 wrote: »

this year so far we still have had 112,000 immigrants arriving even when we are in recession and irish people loosing jobs.

Don't forget all the jobs that seem to be "beneath" the Irish, such as working in MacDonalds, amongst other places. There's a load of Irish on the Dole, like thair parents, who see it as a f**king lifestyle choice? Those 112,000 immigrants will work. Some may work for f**k all, but they'll work.

daveirl

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Teacherman

Thanks for the opinions guys-except for that guy who talked about the downturn lasting ten years. You must be a blast to be around!:cool: It's too soon to say is perhaps the most accurate thing to be said. There are too many ifs.

The sad thing is there are some sad souls out there who think Property will start recovery next year. Depends what you mean by recovery I guess.

OfflerCrocGod

10 years? Maybe if we make some HUGE mistakes - I'd say end of 2010 and we should start seeing things picking up. It won't be a return to the 80s!

Princess Consuela Bananahammock

OfflerCrocGod wrote: »

10 years? Maybe if we make some HUGE mistakes - I'd say end of 2010 and we should start seeing things picking up. It won't be a return to the 80s!

Hmm.... with FF in charge...?! Anything's possible. Especially if McCain wins the election.

leninbenjamin

to those who say our property sector hasn't begun to correct itself; please take a trip down to your local auctioneer (assuming they are still in business) and ask them about the average prices for the past 2-3 years.

kthnxbai

anywho, to the OPs question; had some thought about this. i'm going with 2010. actually I'll be optimistic and say we'll start picking up in the latter quarter of 2009. the discipline of economics is largely forgetting itself.

daveirl

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is_that_so

This chap suggests the 1970s as a parallel of sorts but a lot less extreme.

http://www.independent.co.uk/news/business/comment/hamish-mcrae/hamish-mcrae-it-wont-be-the-great-depression-all-over-again-ndash-or-even-the-70s-or-80s-951395.html

leninbenjamin

daveirl wrote: »

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uhhh... the empirical evidence suggests otherwise. some firms that were selling houses in the hundreds during the boom struggled to meet double figures this year. the majority of the recent surge in signings on are from the construction sector. plenty of sites are lying unfinished... how f*cking faster do you want it?

daveirl

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BenjAii

leninbenjamin wrote: »

uhhh... the empirical evidence suggests otherwise. some firms that were selling houses in the hundreds during the boom struggled to meet double figures this year. the majority of the recent surge in signings on are from the construction sector. plenty of sites are lying unfinished... how f*cking faster do you want it?

I think the issue is not the speed at which it is happening or over what time frame, but how much prices will fall.

Given they have only fallen 10-15% off their high point thus far, you would have to be incredibly optimistic to think that they haven't got an awful lot further to fall.

leninbenjamin

BenjAii wrote: »

I think the issue is not the speed at which it is happening or over what time frame, but how much prices will fall.

Given they have only fallen 10-15% off their high point thus far, you would have to be incredibly optimistic to think that they haven't got an awful lot further to fall.

and has it occurred to no one why this is the case? many people are facing some form of negative equity, it makes no sense for them to flood the market and cause prices to drop further. they'll carry them as long as they can. contrary to what you might have been expecting prices wont drop overnight, and it is better they don't. it'll soften the landing slightly.

secondly, at the moment anyway prices are the least of the worry. the big problem is the banks aren't in a position to lend even to many of those who have good credit ratings. the housing market can only normalize when the banking crises has eased.

another aspect people are overlooking; the price falls aren't distributed evenly. there will always be higher demand in the bigger urban areas like Dublin, Cork, Limerick, Galway. it's the tax relief developments out in the backarse of nowhere that are taking the biggest hit; the places that were way down the list of people's preferences. and where the bulk of the over-valuation was coming from. I actually think the 10-15% devaluation is more realistic than people realize; at the end of the day prices are determined by people's ability to pay. and so far interests rates haven't risen massively, most people's incomes (outside the construction sector) have yet to take the full hit of this recession. people become overly optimistic during a boomtime, and overly pessimistic during a recession. the real facts are always in the middle for those who care to look.

edit: anyway i can't actually see for the life of me why a more rapid decline in the construction sector is desireable? should we not be trying to slow down the decline so we can hopfully gain more time to develop the other sectors that can take it's place and put us back in the realm of positive growth?

BenjAii

leninbenjamin wrote: »

and has it occurred to no one why this is the case? many people are facing some form of negative equity, it makes no sense for them to flood the market and cause prices to drop further. they'll carry them as long as they can. contrary to what you might have been expecting prices wont drop overnight, and it is better they don't. it'll soften the landing slightly.

secondly, at the moment anyway prices are the least of the worry. the big problem is the banks aren't in a position to lend even to many of those who have good credit ratings. the housing market can only normalize when the banking crises has eased.

another aspect people are overlooking; the price falls aren't distributed evenly. there will always be higher demand in the bigger urban areas like Dublin, Cork, Limerick, Galway. it's the tax relief developments out in the backarse of nowhere that are taking the biggest hit; the places that were way down the list of people's preferences. and where the bulk of the over-valuation was coming from. I actually think the 10-15% devaluation is more realistic than people realize; at the end of the day prices are determined by people's ability to pay. and so far interests rates haven't risen massively, most people's incomes (outside the construction sector) have yet to take the full hit of this recession. people become overly optimistic during a boomtime, and overly pessimistic during a recession. the real facts are always in the middle for those who care to look.

LB you are making the best case scenario for optimism, but so many fundamental facts seem to be pointing in the other direction.

We have a huge oversupply of housing. This can only get much bigger. The banking crisis means there will be a lot less mortgages issued by banks, it is likely many more buy-to-let properties will become vacant with depressed rents forcing sales if mortgages cannot be covered, many developers who are sitting on unsold properties but won't lower prices further will have their hands forced by banks who can't support them any more and unemployment is likely
to increase further thus forcing some homeowners in that situation to sell.

Property owners acting rationally in their best interests won't be able to collectively keep the market at the level they want, forces outside their control will be dictating downward pressure on prices, its just a question of how much.

Given the darkening economic outlook, looking at things objectively you would have to say the negatives are considerable.

gurramok

LB. Soft landing does not exist in a bubble and will never exist, it's a myth.

Construction related activity amounted to 18% of the economy in 2001 and 25% in 2006 and dropping to 17% in 2007(source DKM Dept of Environment report dated 2007). By international standards, this need to drop to around 10% for a 'normal' economy to operate, that's the root problem for employment as well as high prices for buyers.
Thats why we have our domestic adjustment and prices are nowhere near affordable yet for the average buyer hence the houses/apts ain't selling. The global crisis has accelerated this.
As per my original post, the quicker this correction happens the better. It may mean 150,000 construction related workers out of a job but thats inevitable and they need to be redeployed.
Regarding your other point, Dublin has seen the biggest falls in prices so far and why you may ask? They rose in price the most and are unaffordable for the demand thats out there.
Cheaper housing/land prices results in cheaper prices for businesses to flourish hence lets get this correction over with faster the better.

Regarding slowing it down so other sectors can take on the slack, that's up to govt policy to do that, so lets wait and see what the budget brings to stimulate it. It's a catch 22, slowing down the construction related excess will leave more pain for the economy while quickening it up will help the whole economy recover but unemployment will rise alot.

Gekko

well according to the Irish Mail on Sunday, Dell are pulling out next year. That's 10,000 jobs gone.

It depends how many other big employers follow suit and how clever the government is in helping to reinvigorate the economy.

At the moment, the signs are not good.

nyarlothothep

is_that_so wrote: »

This chap suggests the 1970s as a parallel of sorts but a lot less extreme.

http://www.independent.co.uk/news/business/comment/hamish-mcrae/hamish-mcrae-it-wont-be-the-great-depression-all-over-again-ndash-or-even-the-70s-or-80s-951395.html

Did you read the comments below? Those people seem to think we're heading for desolate times ahead.

There will be negative repercussions, but I'm skeptical of predictions about their extremity or lack of atm for western societies in general.

homah_7ft

It's somewhat scary to think that the real sh** hasn't hit the fan yet. I think 2010 is optimistic for a recovery in the "real" economy which to me is the crux of the OP's question. At least when Japan hit trouble the rest of the world was in a position to lend when the bank's asset values were determined.


As a side note it will be interesting to see how many large corporations have been trying to make their money "work" during the boom times. I could see plenty of news stories there.

miju

JimiTime wrote: »

So the recession/depression is because of the foreigners. Great, torches and pitchforks all round, we're going to save our economy!

Have to say it's with sadness that as the new reality finally begins to dawn on the Irish they have also rediscovered their love of the phrase "now I'm not a racist but...................."

Burial

50,000 people x €20,000 (A year) = €1 billion.

Hardly causing all of the governments problems and I do believe this is a justly reward for them as they did the work Irish people are too snobish about doing, while being paid quite low. I have some Chinese friends who are literally told work X amount of hours or else your fired, because they can be replaced. Not to mention they get discriminated at work for being "foreign" and taking jobs Irish people didn't want anyway... Not to mention it was hard to get work in the first place because they were foreign...

Flamed Diving

No one knows. Dont believe anyone who says they do.

KhanTheMan

Defimitely noone knows. Even the economists we hear so much from.

The way it goes is as follows.

Boom.
Some people think it will never end, some think it will end tomorrow. Those who kept guessing it would end pretend they actually knew it when they just guessed.
Bust
Some people think it will never end, some think it will end tomorrow. Those who kept guessing it would end pretend they actually knew it when they just guessed.
Boom
............... and so on.

You just have to ride the waves and hope you're not one of the ones meeting up with their mates down in the dole office.

keithm1

its all very depressing
i choose to believe the optimists

hatrickpatrick

I do feel that we have, to a large extent, talked ourselves into at least some of the difficulties we are now faced with.
Look at it this way - everyone is saying that one of the biggest problems in our economy right now is that consumer spending is plummeting faster than anyone can keep up with. This means businesses are going to have to get rid of people in order to break even, and they'll be telling those people "Well hardly anyone is coming in these days so we really don't need X number of people working here" etc etc etc. This in turn leads fo unemployment, which of course drags consumer spending down even more, etc etc etc.

The root of this all is consumer confidence. People aren't deserting shops because they are immediately strapped for cash - most still have some way to go before the recession actually affects them personally. What's spooking everyone is the prognosis - people are saying "Ok I may be laid off next year, or my taxes may go up, and I'm not going to have as much money so I'd better tighten up now and save as much as possible". And this prognosis is, at least in part, a result of the constant barrage of pessimism from the media about our economy. I'm a student, I'm not working yet, but I still find myself feeling down because of the messages we're getting about our economy. And the more we talk like this, the more consumer confidence will drop, therefore the deeper the recession will become.

I'm not trying to say there are no other problems but I think people need to realize that the increasingly bleak forecasts for the economy will end up hurting consumer confidence and dragging the economy down even more...

For example: All the main news today was about the harsh new budget. But how many people saw the article later on in the paper saying that the worlds stock markets are finally beginning to rebound? Every major market soared this morning and the reporting of this was minimal...

SoCal90046

Expectations are definitely part of the mix and can have a strong influence on outcomes.

Rockshamrover

Here are a few points worth considering.

There are 500000 people in Ireland between the ages of 16 and 24. If they stay they will need to be housed. There are thousands of people waiting for property prices to hit rock bottom (understandable) Nobody is building houses this year and probably not next year. That probably means that supply and demand should start to be factors in the value of property again. That should halt the slide.

Polish people leaving. Where are they going to go to? We are all in the same boat as far as I can see. The only country that seems to need workers is Australia. It would be interesting to get the views of some Polish people on this.

karen3212

miju wrote: »

Have to say it's with sadness that as the new reality finally begins to dawn on the Irish they have also rediscovered their love of the phrase "now I'm not a racist but...................."

I'm pretty sure JimiTime was joking about the pitchfork thing.

And the Irish are not all one person, and don't all think the same. And the I'm not racist but.... people were prevalent posters here during the boom, it will probably take years to get some of them to realize that people are people where-ever you go, some good, some bad. I do understand where you are coming from though, and it is sad that people hate other people so much, that instead of working together with people in similar situations, they divide and life is harder for everyone.

We can only hope by letting out some of the angst they feel, it will help them to come to terms with their racism/prejudice, and help them heal.:)

I'm a complete optimist, so I'll say February next year, for the economy to recover. Yay

leninbenjamin

SoCal90046 wrote: »

Expectations are definitely part of the mix and can have a strong influence on outcomes.

understatement of the century.

Webbs

Rockshamrover wrote: »

Here are a few points worth considering.

There are 500000 people in Ireland between the ages of 16 and 24. If they stay they will need to be housed. There are thousands of people waiting for property prices to hit rock bottom (understandable) Nobody is building houses this year and probably not next year. That probably means that supply and demand should start to be factors in the value of property again. That should halt the slide.

That was a figure I was trying to find out the other day. As you say there are going to be those in the 16+ bracket who will start looking for housing at some point in the future (when is open to question though!), However what is the stock of housing oversupply at the moment? Ireland is a nation of home owners and that isnt going to change overnight ( I am not Irish by the way, just something I have observed since moving here). Hopefully a couple of years pain will bring about a sensible return to building in the next few years and house price increases that are sustainable i.e low single digit

Rockshamrover wrote: »

Polish people leaving. Where are they going to go to? We are all in the same boat as far as I can see. The only country that seems to need workers is Australia. It would be interesting to get the views of some Polish people on this.

This is a scenario that not only applies to the Polish.The media are saying that a return to the Irish emigration of the 80s is about to happen if things get worse. However, this is much more of a global recession now and agree totally as to where will these Irish/Polish people go who think the grass will be greener elsewhere? (I don't think even Australia is immune as things stand)

daveirl

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Rockshamrover

Hi guys,

I don't know what the over supply is at the moment but some of the over supply is in areas where people don't want to live.

If house prices drop enough, people can start to do stuff they did decades ago like live in an area that they grew up in or work near.

On the banks not lending. The banks have to lend money to make money. They can't survive if they don't do business. I cant see loans just drying up but they will be more critical in how and who they lend to. That's not a bad thing. A lot of the problem loans are to people for second and third properties, using the first property against the second and so on.

asdasd

500000

Now there is a figure picked out of someones ass. The population is 4 million. The bump in births was about 30 years ago, and the median age in ireland is 35 ( indicating a normal spread across age groups). It is highly unlikely that 25% of the population is contained within 8 years.

Rockshamrover

The Central Statistics Office website has details of the Census of 2006.

It states that there were 632732 people between the ages of 15 and 24 living in Ireland in 2006.

SoCal90046

Rockshamrover wrote: »

On the banks not lending. The banks have to lend money to make money. They can't survive if they don't do business. I cant see loans just drying up but they will be more critical in how and who they lend to. That's not a bad thing. A lot of the problem loans are to people for second and third properties, using the first property against the second and so on.

The problem appears to be that banks are scared that if they lend money, they risk losing it. Under those circumstances, lending dries up.

Rockshamrover

Banks are scared but if they do nothing they will go out of business. That's the reality of the situation.

The banks will cop on to this sooner or later. They may attempt to ride out the storm but that's probably as dangerous as lending money. fortune favours the brave:D

SoCal90046

Rockshamrover wrote: »

Banks are scared but if they do nothing they will go out of business. That's the reality of the situation.

The banks will cop on to this sooner or later. They may attempt to ride out the storm but that's probably as dangerous as lending money. fortune favours the brave:D

If you look at it from the perspective of a bank, they're acting rationally. The banks are waiting it out to get through this crisis in the hope that the regulatory authorities can free up the credit markets. In the US, at least, banks have plenty of first hand evidence that there is risk associated with business as usual, so they hunker down and preserve cash.

topper75

leninbenjamin wrote: »

another aspect people are overlooking; the price falls aren't distributed evenly. there will always be higher demand in the bigger urban areas like Dublin, Cork, Limerick, Galway. it's the tax relief developments out in the backarse of nowhere that are taking the biggest hit; the places that were way down the list of people's preferences.

Correctimundo!

dresden8

another aspect people are overlooking; the price falls aren't distributed evenly. there will always be higher demand in the bigger urban areas like Dublin, Cork, Limerick, Galway. it's the tax relief developments out in the backarse of nowhere that are taking the biggest hit; the places that were way down the list of people's preferences.

And with a lot of the decentralisation on the back burner.................