Why didn't people buy

ZYX

It seems there are a lot of people on this site very good at predicting property prices! It was very easy to see in 2005 that the end was nigh and that buying after that time was very risky. However, for the previous 10 years it was very obvious that prices would rise. Any idiot could see this and many did. The banks were giving out 100% mortgages to anyone, according to posters on this site. Also it was easy to get 10 times your salary as a mortgage. So why didn't the experts here buy in say, 2002, sell in 2006 and walk away with €100,000?

karen3212

It's possible some of the experts were in school in 2002, some could have done exactly as you have said.......I'm sure they'll all answer in good time, I'm only guessing.

Ste.phen

ZYX wrote: »

It seems there are a lot of people on this site very good at predicting property prices! It was very easy to see in 2005 that the end was nigh and that buying after that time was very risky. However, for the previous 10 years it was very obvious that prices would rise. Any idiot could see this and many did. The banks were giving out 100% mortgages to anyone, according to posters on this site. Also it was easy to get 10 times your salary as a mortgage. So why didn't the experts here buy in say, 2002, sell in 2006 and walk away with €100,000?

They did, I imagine

ZYX

Ste.phen wrote: »

They did, I imagine

Well as far as I can make out most have never bought a property.:)

Dob74

ZYX wrote: »

It seems there are a lot of people on this site very good at predicting property prices! It was very easy to see in 2005 that the end was nigh and that buying after that time was very risky. However, for the previous 10 years it was very obvious that prices would rise. Any idiot could see this and many did. The banks were giving out 100% mortgages to anyone, according to posters on this site. Also it was easy to get 10 times your salary as a mortgage. So why didn't the experts here buy in say, 2002, sell in 2006 and walk away with €100,000?

AIB sold there branches in 2006 in a lease back scheme. Most people need to own a house to live in so selling it wouldnt make sence.

ZYX

Dob74 wrote: »

AIB sold there branches in 2006 in a lease back scheme. Most people need to own a house to live in so selling it wouldnt make sence.

Of course it would. Buy then sell, save your €100,000 in the bank and rent a property. It is the experts I am talking about. Those who claim to know all about the property market now. My question is if they know so much about property why didn't they make loads of money?

Dob74

ZYX wrote: »

Of course it would. Buy then sell, save your €100,000 in the bank and rent a property. It is the experts I am talking about. Those who claim to know all about the property market now. My question is if they know so much about property why didn't they make loads of money?

You have to pay capital gains tax if you dont buy another house. 20% i think? Plus all the fees involved. So you would want to clear 30% to be sure of a profit. That is a bad gamable in my opinion

bugler

You'd get a better response if you came out with what you're really trying to say. Are you just bemoaning the flood of people who now point out the crash was inevitable? That is just human nature. Even Bertie changed his tune from "The boom is getting boomier" to "property was overpriced and we all knew it was overpriced". People like to be seen as right, and they won't let past history stand in the way. I don't hold any admiration for those who turned from cheerleaders of the boom to prophets of the bust. I do admire those few who stood up and said things about Irish property that the majority did not want to hear, and that the political class derided.

It was never easy to predict when the music would stop, so I think your..."question" is based on spurious grounds. It would have been a risk to think you could call when prices had peaked, just as it may be a risk to think you know when they'll trough.

Plenty of developers or builders who were lauded for their smarts (wealth being associated with wisdom in the public perception) got the timing wrong and paid for it.

"The banks were giving out 100% mortgages to anyone, according to posters on this site. Also it was easy to get 10 times your salary as a mortgage. So why didn't the experts here buy in say, 2002, sell in 2006 and walk away with €100,000?" - People weren't getting 100% or 10x salary in 2002. I'm sure someone else will tell us more accurately when credit really loosened up. 100% was a bad idea in principle and still is, IMO.

So as to why more people didn't get rich off Irish property if it was so easy to predict:

1. It wasn't necessarily easy to predict what part of the curve you were coming in at. Mistaking the timing of the above could be financially ruinous. As many know now.

2. Credit wasn't so loose in the early 00s to make purchasing all that easy. The opportunities weren't there. Plenty of credit freed up in the mid 00s, but at this stage you were playing a dangerous game.

3. Not everyone is that interested in either making money or buying property. Hard as that may be to accept.

4. For anyone in their 20s they may well have been in college or just out of college and not had credit worthiness or any money to purchase, even if they thought they could see what would happen.

5. Personally, point 4 applies to me, but it was 2006 before I became anyway interested in housing, for whatever reason. At that time, I was blown away by how expensive it was, and I did not believe there was any good reason for it. So count my reason for not making money off property as "lack of interest, lack of money".

I reject entirely your assertion that it was oh so easy to predict the timing of it all.

ionapaul

Some people under-estimated the Irish people's ignorance and willingness to be manipulated by the massed VIs who drove the bubble. I've experienced two great bubbles, the Dot Com bubble and the Western World's Property Bubble (the biggest asset price bubble in history) and during both various economic commentators pointed out the obvious fact that there was a bubble SEVERAL YEARS before the bubble actually burst. Even though the bubble took longer to burst than these commentators expected, it does not make them less right!

A lesson for the future though, do not underestimate the ignorance or willingness to be manipulated of the masses - these manias last longer than the wise would think possible and there is much money to be made even AFTER it is clear that there is a problem with asset prices.

The_Conductor

So why didn't the experts here buy in say, 2002, sell in 2006 and walk away with €100,000?

I bought in 2000- why I didn't sell- it didn't suit me to sell- I have to live somewhere, and it was convenient for work.

Not everyone bought property in a speculative capacity- most normal people bought to have somewhere to live. The paper wealth from increased property prices was purely an illusion- but it made people feel wealthy and the financial institutions encouraged people to borrow against this 'wealth'. That is another element of the travesty.

Firetrap

Well, I can only conclude that the people who didn't buy couldn't afford it, didn't want to buy a house or felt that it was a property bubble and that it would all end in tears.

It's all well and good to borrow 10 times one's salary but look at the repayments :eek:

Theboinkmaster

ZYX wrote: »

It seems there are a lot of people on this site very good at predicting property prices! It was very easy to see in 2005 that the end was nigh and that buying after that time was very risky. However, for the previous 10 years it was very obvious that prices would rise. Any idiot could see this and many did. The banks were giving out 100% mortgages to anyone, according to posters on this site. Also it was easy to get 10 times your salary as a mortgage. So why didn't the experts here buy in say, 2002, sell in 2006 and walk away with €100,000?

Your post makes you seem very bitter IMHO - did you buy a 1 bed apartment in west dublin for €400k in 2006?

I was in a position to buy in 2004 - I knew exactly what would happen and decided to save and rent, which I'm still doing and will continue to do so over the next few years.

Wouldn't call myself an expert - just well informed after spending 8hours on the internet in 2004 researching the biggest purchase of my life

ZYX

Theboinkmaster wrote: »

Your post makes you seem very bitter IMHO - did you buy a 1 bed apartment in west dublin for €400k in 2006?[quote/]
The very opposite infact. I owned a number of properties but sold all (except my current home) in 2005 and pocketed many hundreds of thousands

Theboinkmaster wrote: »

I was in a position to buy in 2004 - I knew exactly what would happen and decided to save and rent, which I'm still doing and will continue to do so over the next few years.

Wouldn't call myself an expert - just well informed after spending 8hours on the internet in 2004 researching the biggest purchase of my life

A mistake as it turned out. If you had bought an average Dublin house it would have cost you €308K in Jan 2004. If you then sold it in Dec 2006 you would have gotten €427K. You would now be sitting in your rented accomodation with €120k sitting in the bank.

latenia

ZYX wrote: »

A mistake as it turned out. If you had bought an average Dublin house it would have cost you €308K in Jan 2004. If you then sold it in Dec 2006 you would have gotten €427K. You would now be sitting in your rented accomodation with €120k sitting in the bank.

So while he correctly saw a bubble, his mistake was not gambling on getting in and out without getting his fingers burned? Are you for real? If I go into a casino and 33 comes up in roulette while I had my money on another number is that a mistake?

SkepticOne

ZYX wrote: »

The very opposite infact. I owned a number of properties but sold all (except my current home) in 2005 and pocketed many hundreds of thousands

Well done!

A mistake as it turned out. If you had bought an average Dublin house it would have cost you €308K in Jan 2004. If you then sold it in Dec 2006 you would have gotten €427K. You would now be sitting in your rented accomodation with €120k sitting in the bank.

Obviously this is true but it is risky buying and selling with such a short time horizon. Get it wrong and you could lose quite heavily. For example you could have pushed for another year and got even more profit but you would have been gambling.

ZYX

Every day on this web site people ask about buying a property now. Without knowing anything about the property, the buyer, the worth of the property or anything else, the experts come out and say what the poster should do. Usually something along the lines of "you are mad", "don't buy", "it will be 50% cheaper in 3 years". I would maintain that while it was obvious properties were over valued in 2000 it was also obvious that demand was hughly outstripping supply and would remain so untill late 2005 at least. Now if that was obvious to me I feel it should have been obvious to these experts. Or is it just that people are experts when it doesn't affect them in any way. Someone else said on this topic that it is very hard to call the top of the market, well it is just as hard to call the bottom now. Just because people feel average prices will fall further that does not mean all prices will fall further. Most houses are different. Some houses (possible most) will go down over next couple of years but some will stay the same and some (yes only a few) will go up. However any comment here that someone may have found what they feel is a bargain is met with a chorus of "you are going to be in negative equity" etc.
My reason for asking my original question is to find out do the people making all these comments have any track record in judging the housing market. ie have they ever put their money where their mouth is?

Caoimhín

ZYX wrote: »

The very opposite infact. I owned a number of properties but sold all.

Why did you need a number of properties?

Large extended family perhaps?

SparkyLarks

ZYX wrote: »

Theboinkmaster wrote: »

Your post makes you seem very bitter IMHO - did you buy a 1 bed apartment in west dublin for €400k in 2006?[quote/]
The very opposite infact. I owned a number of properties but sold all (except my current home) in 2005 and pocketed many hundreds of thousands



A mistake as it turned out. If you had bought an average Dublin house it would have cost you €308K in Jan 2004. If you then sold it in Dec 2006 you would have gotten €427K. You would now be sitting in your rented accomodation with €120k sitting in the bank.

Selling in December 2006 was not easy
I put my house up for sale in Dec 2006 at 345000, It sold in Jan 2008 for 315000.

P.S. I bought in April 2005 and lost money.

As for the rest of your posts. Cop on and learn to say what you mean.

ZYX

latenia wrote: »

So while he correctly saw a bubble, his mistake was not gambling on getting in and out without getting his fingers burned? Are you for real? If I go into a casino and 33 comes up in roulette while I had my money on another number is that a mistake?

No he was 2 years out in spotting the peak price. But that is my point. Someone buying now may be buying 2 years off the bottom. If anyone suggest buying now the majority here say they are mad, without even knowing the property.

SkepticOne

ZYX wrote: »

My reason for asking my original question is to find out do the people making all these comments have any track record in judging the housing market. ie have they ever put their money where their mouth is?

Not at these prices

gnxx

I would suggest that anybody advising "buy now" must have a vested interest in the property market. I wouldn't trust them.

We have a big surplus of housing. Job security is uncertain. Banks, developers and property investors may start to dump property on the market over the next twelve months.

I think suggesting people wait 12 months before buying is sound advice.

ZYX wrote: »

No he was 2 years out in spotting the peak price. But that is my point. Someone buying now may be buying 2 years off the bottom. If anyone suggest buying now the majority here say they are mad, without even knowing the property.

SparkyLarks

ZYX wrote: »

No he was 2 years out in spotting the peak price. But that is my point. Someone buying now may be buying 2 years off the bottom. If anyone suggest buying now the majority here say they are mad, without even knowing the property.

So ther's a lot of hurlers on the ditch here, is that what your saying?

WOW, I though this was a specialist economist's forum. can we get the Mods to check peoples credentials before posting. I suppose a degree in economics is a start, but a masters in property prices would be better

Most economic forecasts for a given year a wrong. At Davos last year most of the world top economists predicted growth.

It is easy to say oh ther is a bubble prices are going to crash. WHEN is the key question to make money. But people were saying that about property in 2000, but then world events flooded cash into the property market inflating it further.

How was any economist supposed to forsee the effects of 9/11

I can 100% confidently predict house prices will rise in Ireland. Might take 20 or even 100 years. But they will rise. so Based on that , why don;t you go out and buy up a load of property now.

latenia

ZYX wrote: »

No he was 2 years out in spotting the peak price. But that is my point. Someone buying now may be buying 2 years off the bottom. If anyone suggest buying now the majority here say they are mad, without even knowing the property.

No, you said he made a mistake by not entering into an irrational asset bubble. There are many indicators for even the most naive house purchaser to be able to tell we haven't reached the bottom of this crash, the most obvious of which is that NO HOUSES ARE SELLING. Without demand, the price will go down-it's on the first page of any economics book. They are piling up every week on daft and myhome and sitting there for months and then years. If you are interested in a specific area there are always certain properties that are more proactive with price reductions that effectively set the lowest price for an area-these aren't selling either.

Example: http://www.myhome.ie/residential/search/brochure/7-prince-of-wales-terrace-ballsbridge-dublin-co&-city/FSSKM315720

This house was originally €2M two years ago. It now sets a new low price standard for 2,000 sq ft in the area (ceteris paribus.) It still has not sold, while similiar (and often inferior) properties are asking €2M+.

SparkyLarks

latenia wrote: »

. They are piling up every week on daft and myhome.

Are they ??

http://daftwatch.atspace.com/

I can't wait for the next update.

Dob74

SparkyLarks wrote: »

Are they ??

http://daftwatch.atspace.com/

I can't wait for the next update.

Interesting poll.

Nice to see volume has maxed out, one of the first plus' for property i have seen in along time.

However its scary to see the jump in properties available from 06

astrofool

SparkyLarks wrote: »

Are they ??

http://daftwatch.atspace.com/

I can't wait for the next update.

The daftwatch polls are live, if you click on the headings it shows the search it's using to get the figures.

Senna

A lot of people will speculate on house prices and will advise other posters. But to most, property means your home, you want to buy as cheap as possible and make the right decision, but its not an investment. Only a small amount of people were in it to make as much money as possible 'flipping' houses and passing on huge debt to the next generation.

ronbyrne2005

Timing market corrections is a mugs game. Many people on propertypin and askaboutmoney in 2005/2006 were contemplating selling and renting but numerous reasons why most didnt, such as Wife or Gf or hubby wouldnt move , people liked their house/area, uncertainty over exact timing(bubble expanded for many years, maybe it would be a few more years, would the rent paid be less than the drops?) Etc Etc. Personally i was just out of university so no money !
Anyway we were right and cheap houses are here to stay for a long time!

uncanny

ZYX wrote: »

My reason for asking my original question is to find out do the people making all these comments have any track record in judging the housing market. ie have they ever put their money where their mouth is?

The main reason Irish house prices went mad is because the banks went mad.

The result of this madness is ISEQ Financial index market cap down from €60 billion in 2007 to €1 point something today.

Hopefully banks will have learnt something from this credit splurge fueled asset bubble. Historically average priced houses have cost about three times an average income repaid over 20 years. That practice worked perfectly well for both banks and homeowners for most of last century, until we entered the new paradigm of increased lending multiples, longer terms, discounted interest rates, second incomes, 100% LTV etc etc. starting an asset bubble from 1996 onwards. This bubble was subsequently fueled by government policy, record low interest rates, negative real interest rates as cost of borrowing was below inflation for many years, inward migration, media hysteria etc.

However the new paradigm of lending that fueled the property bubble both here and internationally has been an unmitigated disaster from a banking perspective.

If bankers return to normal lending criteria - or are forced to by their burnt shareholders & industry regulators, which would be an entirely appropriate response to the current chaos, then we can look forward to average house prices around €100k in Ireland, as Irish average income levels are undoubtedly going to fall in the coming years.

House prices in Ireland are still massively overvalued, despite a bit of froth blowing off the top of the bubble since it collapsed in 2006. But with average prices still around €280k they have a long, long way more to go down in my opinion.

That is why I would strongly advise anyone against buying property in Ireland for the forseeable future. Unless they like buying still overvalued assets in a recently popped bubble market.

pisslips

Well i'm in no position to speculate, I'm 22 and won't be in any position to buy for maybe four years, if things are perfect and even then if it suits my career, lifestyle etc.

Anyways, it seems to me that if everyone's waiting for a drop, nows the time to buy. Sure one would lose in the short term and not hit the bottom price but would surely strike below equilibrium before fingers get itchy and a wave of cash arrives.Maybe a couple of months to one year but people are still having babies and are still earning money, so they can't all 'wait' forever, if thats what they're doing.

Again I'm no economist but these banks and building societies can hardly put pressure on the developers since all their risk is weighted with them, so they'll surely just play the waiting game. While of course the government might keep them above water since it's in their buissness to prevent a domino effect.Even if they let one fold it could put even more pressure on the others as the property price plummets and their assets go to zero.

So I guess the government will keep the property price afloat artificially and we might never meet that fair price everyone eagerly anticipates.

I know nothing about these things I'm just trying to rationalise it as an ordinary person......so is this whats happening?

Theboinkmaster

ZYX wrote: »

Theboinkmaster wrote: »

Your post makes you seem very bitter IMHO - did you buy a 1 bed apartment in west dublin for €400k in 2006?[quote/]
The very opposite infact. I owned a number of properties but sold all (except my current home) in 2005 and pocketed many hundreds of thousands



A mistake as it turned out. If you had bought an average Dublin house it would have cost you €308K in Jan 2004. If you then sold it in Dec 2006 you would have gotten €427K. You would now be sitting in your rented accomodation with €120k sitting in the bank.

Thanks for pointing out my 'mistake' but in a few years myself and my gf will easily be able to buy a 4 bed semi D in Blackrock (or similar area) with mostly cash and a very small mortgage.

I'm quite happy about that :cool: