House prices bottom out?

brianb10

I know everyone will have their own personal opinion on this but I am wondering does anyone know when the "experts" are predicting prices bottoming out and rising again?

looking preferably for predictions from "experts" who predicted the crash in the first place.

who do ye think is ireland's leading expert in this and what does he/she predict?

mrmitty

brianb10 wrote: »

I know everyone will have their own personal opinion on this but I am wondering does anyone know when the "experts" are predicting prices bottoming out and rising again?

looking preferably for predictions from "experts" who predicted the crash in the first place.

who do ye think is ireland's leading expert in this and what does he/she predict?

Www.thepropertypin.com

Personal opinion: Home prices have A long way to fall.
3-4 times average industrial wage for average SemiD in areas like Rathmines or Renmore etc. (€120-150k) will be the norm.
If you don't believe this then take a look the price of property in other parts of the developed world.

latenia

There's no possible way of putting a specific date on when prices will have bottomed out but you'll know they have when this graph reverts to the levels seen in its first half. It only goes up to 2008 so it's dropped further since it was created.

Balmed Out

I cant see any expert being able to guess until a few things happen.
A) NAMA Sell start selling lots of houses.
People in Negative equity get sorted via
reforming bankruptcy?
banks taking equity in homes ?
allowing the transfer of negative equity from one property/mortgage to another?
Until something is done to make the situation of these people somewhat workable, where it can possibly be workable then they will continue to dream of a silly nama for mortgages and massive debt forgiveness program. Until they realise thats not going to happen they wont be eager to cut their losses.

Once these two things happen we will have some idea of what the supply of properties is.

Then theres the demand.
Interest rates will rise and one needs to be stress testing any mortgage to much higher rates then we have seen in some time. Im no expert but for myself im putting a long term of 6% as most likely and seeing how id do if we were down to one wage at 9% interest rates.

Be careful. Im in mid thirthies and impatiently waited for an end to the bubble for over 10 yrs and like others would love to own my own home but im not doing anything till after A and B have happened. Unless of course I found my dream home at a great price where in the locality im looking at theres not a chance as all the sellers think ten percent off of 2006 prices is great value.

mconigol

Granted I know absolutely noting about this but I'd say they still have a long way to go. Don't listen to the so called experts, they tend to have a vested interest.

Slydice

namawinelake has a table of when various "experts" have called the bottom on one of his recent blogs:
https://namawinelake.wordpress.com/2011/05/12/new-irish-house-price-index-launched-by-central-statistics-office/

noxqs

The bottom is when the house prices stop dropping. They will flatline for awhile after that and maybe make modest gains (in line with inflation, max).

Don't worry - house prices won't start going up more than inflation for decades to come, so you're not missing the bus. There will be no more real estate booms in our lifetime on this island. So if you can wait until the bottom is confirmed (say 12 months of modest gains consistently) I'd advice to do that. The difference in 12 months from the bottom will not be significant (less than a %?).

This is no market to buy for the following reasons:

* NAMA artificially keeping a bottom on the market.
* Prices still high - wait for multiples of 3x yearly average pay for a nice, well built, semi-d in Dublin (1 income, not 2). That should be around 120k.
* Economy has too many unanswered questions - too many unknowns in the near future.
* Interest rise on the horizon, how much ?
* Taxation ? How much will it take to get Irish budgets in line ?
* Water charges
* VAT increase

The housing market is illiquid at the moment due to people not being able to sell due to NE. But at some point, the banks will be forced to take action to atleast cover some of their loan book with revenue from house sales and write down their losses. When will this happen? This will surely negatively impact house prices. Wait for this to be over at least.

Ratzo Rizzo

Banks will revert to lending prudently to people with some deposit up to a max of 3 times their income. That was how it was done before, that's how it will be done again. We have just experienced a property price explosion but that is unlikely to happen again in the next 15 to 20 years, probably longer. Prices will settle and return to more normal, affordable prices. So... if you're one of the lucky ones with a steady job paying 40k a year, the house you'll be able to afford will be around the 100-120k mark.

The answer is nobody knows ...I would be a bit concerned at your idea that when the bottom is reached prices will rise again that most unlikely...if a house is worth say 195,000 at the bottom of the market then it will probably be that price ( adjusted for inflation ) for years houses are not going to rise in price for a very long time.

I think the people who think that you will be able to buy a 3 bed semi in a good suburbia of Dublin for 3 times the average wage are dreaming by the way..

I sold my house recently it took 2 months to sell.

djmcr

mariaalice wrote: »

The answer is nobody knows ...I would be a bit concerned at your idea that when the bottom is reached prices will rise again that most unlikely...if a house is worth say 195,000 at the bottom of the market then it will probably be that price ( adjusted for inflation ) for years houses are not going to rise in price for a very long time.

I think the people who think that you will be able to buy a 3 bed semi in a good suburbia of Dublin for 3 times the average wage are dreaming by the way..

I sold my house recently it took 2 months to sell.

House prices will be limited by the future availability of credit and I hope that the banks have learnt their lessons and do not give out stupid multiples of a persons wage when they are fully back on their feet(whenever that is). Credit availabilty in itself will dictate future house prices.

who_ru

djmcr wrote: »

Credit availabilty in itself will dictate future house prices.

Er........ employment levels might also influence house prices, as well as taxes, interest rates, distance from urban centres etc.

djmcr

who_ru wrote: »

Er........ employment levels might also influence house prices, as well as taxes, interest rates, distance from urban centres etc.

Agree with you there, but we Irish have shown that we will spend whatever the banks will give us to spend on property even if it is a stupid multiple of our income. If they are limiting the amount that we can borrow this will limit what we can spend on property.

kleefarr

How about when all those empty houses are full?

How anybody can expect the price of houses to stabilise and start to go back up before then bewilders me.

But then again, I have seen more stupid things.

Bollocks. It's all bollocks. The whole world.

jackal

I would be wary of the kind of definitive predictions on here saying 120k or whatever for a semi-d. People choose what they want to believe, but the fact is that if you want to wait for a nice house to come down to 120k based on the theory of 3/4 times wages, you will be waiting a long time for all the couples who have 2 wages coming in to buy first and can and will outbid you.

Also, people say "wait for NAMA" like its going to be a game changer. Perhaps it will be, if you want to buy a new build apartment in the docklands or a duplex in a no-hope two horse town somewhere. NAMA does not have an abundance of nice 3 bed semi-d's to offload, so the prices on these are unlikely to be hugely affected.

The people in negative equity argument is a good one. It may indeed lead to much more property on the market, and competition may drive prices down... or up?

The most important thing is credit. There are a limited amount of cash buyers out there, and when they have all sated their appetites it all comes back to what banks will lend first time buyers to buy, as without them, the market grinds to a halt.

Just as economists got it wrong
* on the way up(this cant go on much longer),
* at the peak(its all down to mc-dowell & stamp duty),
* at the beginning of the way down(soft landing),
* when prices were 20%, 30% down(sure they can't drop any more)
* and now(sure we must be at the bottom)

Just make up your own mind, seriously, there is no crystal ball and we are not in a normal situation with all this ECB/IMF messing.

Short answer: Morgan Kelly said property would lose 80% of the gains made during the boom.

Treehouse72

who_ru wrote: »

Er........ employment levels might also influence house prices, as well as taxes, interest rates, distance from urban centres etc.

No, the poster you quote is absolutely correct - credit availability is, by a very, very long distance, the primary influence on house prices. If you think about a house price, the largest component of that is the loan you get. Even your salary - which might go up a bit or down a bit - is dwarfed by the mortgage itself. Ditto movements in IR's - the amounts your repayments go up or down is immeasurably smaller than the mortgage itself. Ditto taxes going up or down a bit. And things like location might add or subtract a few grand - or a lot of grands! - one way or the other, but always far, far less than the size of the mortgage itself.

If you want to know where house prices are going, look at credit. That's the key, and as we know it is still sinking like a stone. Which is why we can be so confident that 2006 is not coming back: since banks will never again loan you 400k for a 1-bed apartment in Smithfield, how can the price ever be that high again? It can't. Unemployment could drop to 5%, we could all get 10% pay rises, emigrants could all return...but unless the bank will give them that 400k, the Smithfield apartment will not transact at 400k.

rustyregan

jackal wrote: »

Also, people say "wait for NAMA" like its going to be a game changer. Perhaps it will be, if you want to buy a new build apartment in the docklands or a duplex in a no-hope two horse town somewhere. NAMA does not have an abundance of nice 3 bed semi-d's to offload, so the prices on these are unlikely to be hugely affected.

NAMA is thought to have about 6000 properties within the M50 area (http://namawinelake.wordpress.com/2011/04/15/landmark-auction-in-dublin-a-success-despite-scenes-of-chaos/#comment-4611) so I think it will be significant for Dublin (I'm not sure if namawinelake's figure includes commerical properties - even still, it's a high number). I think distressed properties (e.g. those repossessed by Bank Of Ireland Scotland) are also significant.

I agree though about the difficulty in forecasting the short term.

A couple of things I think may have an upward pressure on house prices is the percieved threats to deposits in the wake of the State's dip into pensions and the return of inflation (now over 3%). As against that there's issues such as the threat of property tax and rising interest rates.

It probably is true that the banks' ability to offer mortages is the single biggest factor. Given that their share prices are at almost record lows, the markets don't seem to think the banks are going to be solvent any time soon. So despite all that money we threw on the bonfire of recapitalisation, few will be able to get substantial loans for the few years. And then there's the default issue - but that's a whole other scenario.

djmcr

Figures released today from the Irish Banking Federation (IBF) show that mortgages advanced in the first three months of 2011 was €577m which is 96.91% down from the peak in Q3, 2006 and 73.08% lower than same period last year.

CSO statistics released this week show that the rate of decrease in house prices was higher in February and March (-1.7% each month) than for the previous 18 months(http://www.cso.ie/releasespublications/documents/prices/current/rppi.pdf , page 3 of report)

Lack of credit is having a significant effect on house prices.

The_Conductor

kleefarr wrote: »

How about when all those empty houses are full?

How anybody can expect the price of houses to stabilise and start to go back up before then bewilders me.

But then again, I have seen more stupid things.

Bollocks. It's all bollocks. The whole world.

The issue is- by some measurements we may have up to 180,000 vacant residential units nationally- and a net outward migration of population of up to 3,400 a month (mostly Irish nationals emigrating elsewhere for economic reasons, with little possibility of return). In theory- if current trends continue- our population has already peaked and is falling- most notably in the 18-30 age group. This would presumably also be the age group most likely to buy some of these vacant properties. Its entirely forseeable, that in the absence of demolishing significant numbers of these residential units- we will never have a population high enough to occupy them.........

Rabidlamb

From RTE:
http://www.rte.ie/news/2011/0519/nama-business.html

The National Asset Management Agency plans to provide financing measures for residential and commercial property deals.

In speeches given today in Cork and Dublin, NAMA chairman Frank Daly and chief executive Brendan McDonagh, respectively, outlined details of the agency's plans to boost the residential and commercial property markets.

In relation to commercial property, NAMA said that it was looking at ways to provide debt finance, in the form of vendor/staple financing, for purchasers of commercial property under the control of NAMA debtors or receivers appointed by the agency.

Under this proposal, the purchaser would pay 25%-30% of an asset's purchase price up front, and enter a loan agreement with NAMA to repay the outstanding amount over a five- or seven-year period.

NAMA said that it would typically 'engage with such financing arrangements with sovereign wealth funds, pension funds, insurance companies and private equity firms'.

It said that the mechanism was typically used to finance income-producing assets, rather than land or unfinished buildings.

NAMA said that it had 'tentative evidence to suggest that we may be close to the bottom of the cycle in Ireland'.

Would you want your pension fund manager to invest in such a scheme ?.
An attempt to use private savings to artificially prop up the market.
I'd hope any financial institution would recognise the risk here & run a mile.

The_Conductor

On top of that- the rate of fall in prices- is accelerating again- we're now at about 1.7% per month. A significant factor in the accelerating falls in prices- is market illiquidity, alongside a credit crunch, increases in interest rates- and the simple fact that over half the recent sales have been fire sales at auction. This trend looks set to continue- with firesales planned for Dublin, Cork and Galway between now and the second week in July. Sigh.......

eco2live

They need to let the price reach their natural level or even overshoot slightly so that private company's want to get in and fund them.

I hope that they ban any mortgages over 25 years and make the multiple of salary 3 times the major + 1 times the second income. They wont though and in a generation we will be in the same boat again. Irish people will probably still lining up to avail of these loans

Its legislation thats needed for the rental market. Investment in public housing (ghost estates) funded by savings in rent allowance.

Anyone taking out a mortgage at the moment is mad. There is no value yet still.

SoupyNorman

Rabidlamb wrote: »

From RTE:
http://www.rte.ie/news/2011/0519/nama-business.html

What I find shocking in that link

The Chairman of the National Asset Management Agency has said it hopes to kickstart the property market by providing loan finance to people and companies to buy residential and commercial property.

To me it seems like NAMA are trying to make a river flow uphill.

MuffinsDa

What is exactly shocking about NAMA trying to bring liquidity to market and "kickstart" it in order to generate transactions and get things moving?!

Do you think they should try and stagnate the market instead?

I think you are mistaking kicstarting to generate transaction with propping up the market in order to raise prices. For example one way to achieve such "kickstart" is loss crystallisation and fire sales!

But some people will be happy to moan regardless, I guess!

djmcr

Look at this for a line

'provides an incentive to purchasers to invest at current prices'.

Oops we paid too much for the property and we will do anything to prevent prices falling to an affordable level for the Irish people. NAMA acting in its own self interest here.

Also seems very uncompetitive in arranging finance provided that you buy one of our properties. God help anyone trying to sell their house privately if this goes ahead.

The_Conductor

Of course NAMA is acting in its own self interests. Why would anyone imagine otherwise? They are not offering loans and mortgages to buyers out of the goodness of their hearts- they have a shocking stock of property that they need to shift, and this is just one weapon in their arsenal.

NAMA is a vehicle to sweat the loans of developers and the assets on which those loans are secured- for the maximum possible amount, period.

SoupyNorman

MuffinsDa wrote: »

What is exactly shocking about NAMA trying to bring liquidity to market and "kickstart" it in order to generate transactions and get things moving?!

Do you think they should try and stagnate the market instead?

I think you are mistaking kicstarting to generate transaction with propping up the market in order to raise prices. For example one way to achieve such "kickstart" is loss crystallisation and fire sales!

But some people will be happy to moan regardless, I guess!

No, we should not stagnate the market..we should let it hit the floor naturally.

You should go find out with what money they are planning to use to fund this.

If you still have trouble figuring it out,then just look at this simple illustration:

eco2live

When are we going to have some joined up thinking? All of Irelands problems are down mismanagement and incompetence.

The cost of living is crazy.

The effects of the high cost of living is:
High costs on business
High wages
High prices for consumers
High energy costs
High transport costs
High debt levels

We all know this but who is asking why? Why do companies charge more to Irish people? Its the circle of incompetence generated by the Irish state.

Lets take two examples

1. Fas, Pure incompetence embodied. A billion budget and the results are that people are more likely to gain employment if they don't go to Fas.

2. HSE, where do you start. We might as well burn the money.

What state or semi state company in Ireland are delivering a world class demonstrable, tangible or even comparable service when compared with other western countries? Now compare that to the renumeration of the employees and managers in these company's. It is a joke.

The state needs to get its act together on the following:

Don't sell the state assets.

Stop removing people from the public sector and start managing them properly.

Close down Fas and start again by awarding a private contract to an internationally accredited training firm. There are many Irish company's that are well regarded in this area.

Bring back benchmarking (Yea I know) but look at it on a European basis. This includes pensions. Benchmark the cost of living as well as salary to ensure fairness.

Do an independent audit from an international management consultancy and involve a company like IBM to streamline the process of delivering services in Ireland.

Put in place a change management process and performance management system.

Divert staff to other areas of the public sector with time saved.

Anyone who does not perform as per the new criteria after demonstrated support and training should be sacked. Simple as.

A real promotion system should be in place so that the cream rises in the public sector.

Do the same with all councils etc. We cannot expect the same people who are running all sections of the state to sort this out. They have too much vested interests and precedence of large payouts (Whats the worst that can happen?)

Take on doctors, dentists, solicitors and other services to ensure that they drop their prices.

Drop social welfare.

Rip up trade agreements and take on the unions.

Legislate to protect workers.

Half rent allowance. Legislate for proper renting standards.

Close the VHI and increase taxes to a similar amount for those who can afford to pay it.

Legislate for transparency of profits from supermarket chains.

Drop rates for business

If energy, rent, housing, rates and taxes that we currently pay where used properly we would have a surplus and we could go back to the markets.

Nobody is going to lend to Ireland while the above continues. All of the cost of living issues are a consequence of two things. Easy credit and bad management from the government. The easy credit has dried up but the bad management continues.

We would not need so much money if all of the above costs where not so artificially inflated by incompetence and mismanagement and vested interests.

So no I don't think that Nama should be giving out mortgages.

If the government do not have the metal to take on the vested interests then you can be sure that the IMF and EU will. We are not fooling anyone. We don't believe it ourselves. Why would the markets?

Rant over

Treehouse72

MuffinsDa wrote: »

I think you are mistaking kicstarting to generate transaction with propping up the market in order to raise prices.

Has it occurred to you that those two things are the same? That is to say, if the market is stagnating it is because prices are too high. So if NAMA moves in to break that stagnation, they are by definition propping up - or, in effect, "raising" - those prices.

djmcr

eco2live wrote: »

If the government do not have the metal to take on the vested interests then you can be sure that the IMF and EU will. We are not fooling anyone. We don't believe it ourselves. Why would the markets?

You've hit the nail on the head. I hope somebody is listening so we can get this country going again

desertcircus

The comments about how people aren't going to get a three-bed semi-d in south Dublin for 120k seem to miss a big point: there's absolutely no reason why prices won't fall that far. If banks refuse to lend more than 90% of the price of a house to a maximum loan of three times your salary, then the median house in Dublin will go for about three times the median wage plus about eleven per cent. If the median wage is 30,000, then the median house will go for 100k. That's it; there's nothing else to get. Houses will eventually sell for as much as the bank are willing to lend to people plus deposit. That means that half the houses in the country will be going for about a hundred K - once prices have recovered from the overshoot.

At some point, the average house in Ireland will fall below a hundred thousand quid. And it won't be quick and painless. How many people in the country have the necessary deposit to get a mortgage now? How many of those would be approved for a mortgage? And how many of them are in any mood to buy a house? Until the number of people meeting those criteria goes above the number of houses for sale, we'll keep sliding.

Rabidlamb

smccarrick wrote: »

The issue is- by some measurements we may have up to 180,000 vacant residential units nationally- and a net outward migration of population of up to 3,400 a month (mostly Irish nationals emigrating elsewhere for economic reasons, with little possibility of return). In theory- if current trends continue- our population has already peaked and is falling- most notably in the 18-30 age group. This would presumably also be the age group most likely to buy some of these vacant properties. Its entirely forseeable, that in the absence of demolishing significant numbers of these residential units- we will never have a population high enough to occupy them.........

Great point that I'd never considered, the decay of the young professional class who make up the bulk of FTB.
It makes this whole NAMA proposal even more risky.

Say FTB funds are capped at 3x salary + 10%.
If we predict €30k to be a decent young professional wage then they've €100k to play with in the future.
We're looking at a flooded market where every 3 bed semi is priced at that mark, like where the old €318k stamp duty threshold used to leave us.
The only way for a seller to differentiate their product is to discount it further.

ricman

rent allowance is 500 approx for a single mother outside the citys, so you think a mother with 2 kids can rent a house for 250 per month.Thats not realistic.it would be easier to have nama give units to local authority ,then authority gives units to people on the housing list .
Then rent allowance bill goes down, government doesnt want to do this as
lower rents = lower house prices ,many landlords rely on ra to pay the mortgage.A good start would be to reduce civil service pensions and salarys in the higher grades ,and reduce wages/bonus.s in aib and bank of ireland.
In dublin ra limit is 930 per month for a single mother.
It seems to me prices will continue to fall for the next few years,the governments only plan is to try to renegotiate the national debt and reduce the interest rate on loans from the ecb.

SoupyNorman

ricman wrote: »

lower rents = lower house

I would have to say that's spurious at best, House prices are crashing down around us and rental prices have only seen marginal drops (averagely) but have ceased dropping and in some areas have increased (slightly).


Im terms of house prices bottoming, you can bandy around all the facts and figures under the sun but the most alarming factor is that house prices are still actively falling, when we see these graphs flattening out we can start the 'bottoming out' conversation.

tanyabond

SoupyNorman wrote: »

I would have to say that's spurious at best, House prices are crashing down around us and rental prices have only seen marginal drops (averagely) but have ceased dropping and in some areas have increased (slightly).


Im terms of house prices bottoming, you can bandy around all the facts and figures under the sun but the most alarming factor is that house prices are still actively falling, when we see these graphs flattening out we can start the 'bottoming out' conversation.

Maybe better this way -
Lower rents ⇒ Lower house prices?

eco2live

Its the propping up of the market that is causing the rise in rents also thought lack of available quality housing. I am not suggesting that this is unfair as the government should do what is right and practicable to help people who are struggling BUT if people are not going to be able to sustain their debt then this needs to be faced up to.

There needs to be an across the board right-down of a % mortgage debt for people who have paid and those who have not for fairness to reflect the new market. After that it should be back to normal business and the reality of people being able to pay their mortgages or not. Without this and with other interference in the market we are still in limbo.

For example all the tradespeople and construction employees who where on big money in the boom are not going to be in that position again for a long time (if ever). If they have big mortgages then this needs to be dealt with for their sakes. The state should buy the property's at knock down prices from the banks and then rent them back to the family's involved for an amount that would cover the governments knock down purchase price. This would mean being able to stay in the house. To stop everyone doing this is it would mean that they would never own the house unless they bought it back at a later stage at the reduced market levels.


We need an end to:

Interest only payments.
*50,000 in Arrears.
*Banks owned by state and unable to take action.
*Interference in the market.
*Outdated bankruptcy laws.

People need to be freed from debt also to get the domestic economy moving again. Not only banks.

No Nama should not be giving loans.

The_Conductor

The inverse of this- is why should the responsible people, who didn't go on multiple sun holidays every year, and who bought a modest apartment or house- irrespective of whether or not they have a mortgage- bail out their neighbours who lived the high life for the past 15 years? The virtue of their prudence, far from being rewarded, is in fact being punished.

I accept fully that Irish bankruptcy law, particularly as it pertains to personal bankruptcy- has to change. I do not see how or why anyone should have any expectation to remain in their nice home- whether or not they are paying rent- or indeed why should they have the option to purchase it at a reduced price at some stage in the future?

While debt forgiveness to a certain extent is almost inevitable- there has to be an element of punishment too- perhaps by repossessing their homes and offering them rented accommodation in any of the properties that NAMA is unable to dispose of? Any property in any of the larger urban areas should be considered fair game for repossession- and appropriate action taken. There should be a commitment to provide housing for anyone undergoing the debt forgiveness process- but not of their choosing, and there should be an automatic procedure in place to repossess any residential property or other assets that they might have.

Its all well and good to have wishy washy ideas about a NAMA for the little people- sure aren't all the banks nationalised anyway- lets forgive mortgage debt (they aren't all nationalised anyhow- BOI are independent and look set to be able to self-fund/self-finance, unlike the other institutions, with only a minority state ownership). The fact of the matter is this country is bankrupt. Despite the bailout- we are continuing to spend (aside from any bailouts) over 16 billion a year more than our tax revenues. We are also in hock to the ECB, the IMF, the ERSF and other bodies to the tune of 210 billion........

Where do you think you're going to get the money to fund this debt forgiveness from? Keep in mind Irish mortgage debt is almost 600 billion (thanks to our uniquely Irish pre-occupation with 'owning' property and a vitreous hatred of renting). If you decide- we'll wave a magic wand and forgive 20% of mortgage debt- thats another 120 billion that you have to magic out of somewhere. Regardless of what you imagine- the government doesn't have a magic money tree growing on Merrion row that they can give a shake to- to fund any of these plans..........

Added to this- the 50,000 in arrears- excludes those who have already come to arrangements with their banks, or turned their mortgages into interest only payments- those in current trouble are actually closer to 145,000 in number- of which almost 30,000 haven't actually made any payments in over a year, and even of this figure- its only counting those in arrears of over 120 days.

So- we reform personal bankruptcy law- fair enough- Irish law is almost uniquely harsh in the personal era- however similar to other jurisdictions- all assets are fair game- we can have our socialist bent if we like- but if you look at even nominally socialist countries- all they guarantee personal bankrupts, is high density council accommodation. We should do likewise.......

Yes- we have a problem- however rewarding people for living the high life- is not a solution- we need to house them, but thats it........

eco2live

I was talking about facing up to the reality of the situation and future prospects of a mortgage being paid. A portion of all mortgages should be written down even for those who are not in arrears. If they bought in the last number of years.

People who have paid their mortgages or those who bought before the boom should be happy that they where and are in a position to pay their mortgage.

We are all going to have to pay for all this crap as a society anyway because of a lack of regulation. Why should people who don't pay their mortgages still have ownership of the properties that they live in long term. At least they would be state owned assets if it was done as I suggested. That is fairer on those lucky enough to still be able to pay a private mortgage.

We need to know the real value of property in Ireland. A value based on income levels, area, availability and standard of the property. All this interference in the market is typical and only protects vested interests.

eco2live

smccarrick wrote: »

Where do you think you're going to get the money to fund this debt forgiveness from? Keep in mind Irish mortgage debt is almost 600 billion (thanks to our uniquely Irish pre-occupation with 'owning' property and a vitreous hatred of renting). If you decide- we'll wave a magic wand and forgive 20% of mortgage debt- thats another 120 billion that you have to magic out of somewhere. Regardless of what you imagine- the government doesn't have a magic money tree growing on Merrion row that they can give a shake to- to fund any of these plans..........

I know TBA but I am clinging for some reality and hope

You are right but the reality is that we are doomed either way. We can pretend that assets are worth more then they are. We can pretend that by some miracle that all the construction workers will become programmers.

If two people have a mortgage for 300k (for a house worth 200k or less) and can't pay or have no hope in the future of paying anything off it there is no point pretending that this asset is worth 300k on the books of the banks.

I think the time has come to put it all out there in all its ugliness and see the real debt that awaits us. This might mean that we don't have the best paid public servants and government in the world any more. It might mean normal and fair pension levels. It might mean a lot of pain up front but in the long run we will be better off facing up to it and getting started on the recovery.

Treehouse72

eco2live wrote: »

I was talking about facing up to the reality of the situation and future prospects of a mortgage being paid. A portion of all mortgages should be written down even for those who are not in arrears. If they bought in the last number of years.

People who have paid their mortgages or those who bought before the boom should be happy that they where and are in a position to pay their mortgage.

We are all going to have to pay for all this crap as a society anyway because of a lack of regulation. Why should people who don't pay their mortgages still have ownership of the properties that they live in long term. At least they would be state owned assets if it was done as I suggested. That is fairer on those lucky enough to still be able to pay a private mortgage.

We need to know the real value of property in Ireland. A value based on income levels, area, availability and standard of the property. All this interference in the market is typical and only protects vested interests.

First, I wholeheartedly agree with your general point - that we must face up to reality and stop pretending. I also agree that some form of realising losses is needed. But I disagree with how we allocate those losses.

Rather than giving money directly to mortgage holders to write off debt, we should proceed with repossessions and plug the resultant holes in the banks. That sounds backwards to what most people think, but I think it's immeasurably better.

First, because it avoids moral hazard. And second, because this way we find a floor on property prices faster. If we hand over money directly to mortgage holders it plasters-over underlying problems without really resolving them. Better to find the floor by repo/firesale and allocating the money into the banks to meet the shortfalls.

The_Conductor

Why do you imagine that any of these mortgages- even if you write them down- will ever be paid?

We had over 200,000 men involved in the construction industry- 120,000 of whom left school since 1994 without a leaving cert. These guys were earning more as brickies than consultant surgeons........ They are *never* going to be in a position to pay their mortgages- and most have zero intention of taking a job at the average industrial wage (currently 31k according to the ESRI)- and why would they, when some of them earned 8 times this during the boom?

Sure- we can call writing off debts/ writing down the value of property as the first step in any solution- however its not........

For every one of these 145,000 who are currently incapable of paying their mortgage- there are over 200,000 in unsuitable accommodation- purchased in the past 15 years, who are paying their mortgages. Why do the 145k defaulters get a free-ride, while those who are able to pay their mortgages are incapable of moving into child friendly accommodation- even while their defaulting neighbours are having their debts written down?

We built very few of ye olde houses with their little gardens for the kids to play in, garage for dad to store whatever it is that gets stored in garages etc- over the past 20 years. Of those that we did build- a significant portion of them are the properties that are in arrears/default.

If we are writing down the book value of these properties- the folk who are currently paying their mortgages- but in unsuitable property (e.g. a family of 4 in a 2 bed apartment for example) should have first dibs on these- over and above the current occupants who are not paying their mortgage..........

The galling thing is that the people who did get to party for the past 15 years- are getting off scott free......

djmcr

Treehouse72 wrote: »

Rather than giving money directly to mortgage holders to write off debt, we should proceed with repossessions and plug the resultant holes in the banks. That sounds backwards to what most people think, but I think it's immeasurably better.

We need to change the bankruptcy laws before we go down this route so that people who are unfortunately in this situation can have a clean sheet to start over again in a period of time

mrmitty

We need a change to the bankruptcy laws for a couple of reasons.
One of the reasons is to insure that banks are aware of the fact that when they underwrite a mortgage that there is a Distinct possibility that they will not get repaid. This will have the effect of forcing them (banks) to take more care when qualifying mortgagee's.
We can sit here and point the finger all day long but the truth is that we were all to blame. We all rode the pig, we all benefitted from the boom,Some more so than others but we all benefitted. Now we all have to pay.

djmcr

mrmitty wrote: »

We need a change to the bankruptcy laws for a couple of reasons.
One of the reasons is to insure that banks are aware of the fact that when they underwrite a mortgage that there is a Distinct possibility that they will not get repaid. This will have the effect of forcing them (banks) to take more care when qualifying mortgagee's.
We can sit here and point the finger all day long but the truth is that we were all to blame. We all rode the pig, we all benefitted from the boom,Some more so than others but we all benefitted. Now we all have to pay.

Don't agree. Some people didn't ride the pig and are paying now through higher taxes and if some people have their way they will end up paying other peoples mortgage writedowns into the future

mrmitty

djmcr wrote: »

Don't agree. Some people didn't ride the pig and are paying now through higher taxes and if some people have their way they will end up paying other peoples mortgage writedowns into the future

Sure you did, be it firsthand thru the employment derived from the boom or from higher taxes raised from stamp duty, income tax etc.which lead to a more bloated Civil service, higher benefits for pensioners, people on the dole etc.etc. Etc.
You benefitted from the knock on effects of the boom too.
All our boats rose with the tide.

The_Conductor

mrmitty wrote: »

Sure you did, be it firsthand thru the employment derived from the boom or from higher taxes raised from stamp duty, income tax etc.which lead to a more bloated Civil service, higher benefits for pensioners, people on the dole etc.etc. Etc.
You benefitted from the knock on effects of the boom too.
All our boats rose with the tide.

Not all boats rose with the tide........

There were approximated 37,000 more public sector employees in 1994 than there are now (and approximately 8,000 more civil servants than currently).

Certainly public sector pay rose by 59% on average between 1999 and 2008- however inflation totalled almost 46% in the same period. This ate up a lot of the additional pay given to the public sector, increases for social welfare recipients and pensioners etc. Short of doing a big Mac index (a la The Economist) and using the core price of a staple, or a basket of staples- as a means of measuring purchasing power......

Yes- our social welfare is now above that of several of the OPEC oil producing countries- which surely shows how we totally lost the run of ourselves......?

I'm not sure what happened to all the taxes that accrued from stamp duty- however given that these taxes were part of the mortgages that people were borrowing- using this as an example of largess- has to be factored as at least a portion of our current liabilities to be paid back.........

There are significant numbers of people who were not on social welfare, were not on pensions and whose sole benefit from the boom was a reduction in headline tax rates- which in itself was not a monumental amount (and we all got slaughtered in indirect taxation in any event).

Lots of people had their 3-4 foreign holidays a year, their new car in the driveway, their equity release on their property to fund extravagant livestyles etc- but lots of people didn't get these either........

My net pay is now back where it was in 1998- and I'm one of the lucky ones, I have a job...... Meanwhile I've also two kids- and a big mortgage to pay. My neighbours laugh at me and call me a fool, I'd be better off on social welfare- what gives?

We have created an entire generation of the 'entitled'- and good luck trying to get these entitlements back off them.

not even wrong

mrmitty wrote: »

Sure you did, be it firsthand thru the employment derived from the boom or from higher taxes raised from stamp duty, income tax etc.which lead to a more bloated Civil service, higher benefits for pensioners, people on the dole etc.etc. Etc.
You benefitted from the knock on effects of the boom too.
All our boats rose with the tide.

You're changing your story here, first you said "we are all to blame" now after being challenged you've retreated to "we all benefited".

The truth is that we're not all to blame, this is a lie spread by the developers and incompetent government officials who awarded themselves massive salaries and rode around in helicopters while they made the disastrous decisions that led us off the cliff, after which they retired to six-figure pensions and mansions in their wives' names safe from prosecution.

While the rest of the population may have benefited incidentally from the bubble, that does not make it our "fault" -- if you steal €10 and spend it in my shop, does that mean I share the blame for your theft?

If everyone is to blame, nobody is to blame. That's why we keep hearing this lie over and over again from certain sections.

the groutch

I've gotten sick of this "WE"

"WE partied during the boom"
"WE lost the run of ourselves"
"WE created a property bubble"

no we didnt

it was all done by the select few who were well off anyway, but still wanted more

and now the "working class" man, who lived within his means and only incidentally gained a few minor perks, is the one footing the bill

Ray Palmer

the groutch wrote: »

no we didnt

it was all done by the select few who were well off anyway, but still wanted more

and now the "working class" man, who lived within his means and only incidentally gained a few minor perks, is the one footing the bill

The people I know who went crazy were generally the working class and not the professionals. When a plasterer has bought 3 houses on top of his home in the space of 7 years I think you can say he is the author of his own financial situation. The people who never considered ramification of a change in the market reject fundamentals of property investment are to blame. They came from all walks of life and were certainly not well off to start with . I

I was lucky enough to be in high demand during the boom and took massively high daily rates. The nation did it to themselves through financial immaturity. People getting cars as part of their mortgage and never thinking that out were not wealthy people. Lots of silly stuff done by lots of people with no clear demarcation of prior wealth.

That is what I see. The press only report on big cases but I know people in the DSFA and FAS. They are seeing people who own more than one property coming in after gambling the equity in their family home. I didn't do something foolish but I still understand the use of "WE" even though it is not me.

jackal

desertcircus wrote: »

The comments about how people aren't going to get a three-bed semi-d in south Dublin for 120k seem to miss a big point: there's absolutely no reason why prices won't fall that far. If banks refuse to lend more than 90% of the price of a house to a maximum loan of three times your salary, then the median house in Dublin will go for about three times the median wage plus about eleven per cent. If the median wage is 30,000, then the median house will go for 100k. That's it; there's nothing else to get. Houses will eventually sell for as much as the bank are willing to lend to people plus deposit. That means that half the houses in the country will be going for about a hundred K - once prices have recovered from the overshoot.

At some point, the average house in Ireland will fall below a hundred thousand quid. And it won't be quick and painless. How many people in the country have the necessary deposit to get a mortgage now? How many of those would be approved for a mortgage? And how many of them are in any mood to buy a house? Until the number of people meeting those criteria goes above the number of houses for sale, we'll keep sliding.

I think you are extrapolating the median wage (of an individual worker) as the average household income. I don't have the statistics to tell if couples are the majority or what but anyway:

A proportion of first time buyers are couples, and a proportion of those couples are going to have two incomes. In the case of two income families, their household income is going to be significantly higher than 30,000, and their borrowing power proportionally greater.

Therefore, comparisons with "normality" 20-30 years ago, when women had to retire from public service when married and so on, are unlikely to be valid.

Anecdotal: Each and every one of my friends (in their 30's) who have bought houses have done so with 2 incomes.

rustyregan

Why don't we just go after those who broke the law? These people are legally to blame. If we were to blame everyone who got a pay rise or bought a house we'd be here forever. Do the Icelandic people blame themselves for their banks going to the wall?

It's looking like there will be no prosecutions in the Anglo case, the Seanie Fitzpatrick one man bank, Quinn's dodgy dealings, the planning backhanders... all these things and more. Surely we can all agree that these people are more to blame than anyone else because they acted outside the law?

Yes we're all taking, or are going to take paycuts because the pool of money left in the state is drying up. But this maschoism is misplaced I think - we're doing it because we have to, not because we're culpable.

During the boom poor people who wanted to buy anything had to take out a loan as they were priced out of houses, cars and other major expenditure items. They were offered cheap money by the banks and the level of relative inequality was such that there was social pressure to take on these debts. To blame them now for being hoodwinked is an incorrect appropriation of blame.

That said, anyone who bought multiple properties were and are engaged in property speculation and property speculation is a definite contributor to our current malaise. According to David McWilliams, these people were often professionals looking for investment vehicles and looking to get on the gravy train. I don't doubt that there were some lower level earners doing the same too.

jackal

rustyregan wrote: »

Why don't we just go after those who broke the law? These people are legally to blame. If we were to blame everyone who got a pay rise or bought a house we'd be here forever. Do the Icelandic people blame themselves for their banks going to the wall?

It's looking like there will be no prosecutions in the Anglo case, the Seanie Fitzpatrick one man bank, Quinn's dodgy dealings, the planning backhanders... all these things and more. Surely we can all agree that these people are more to blame than anyone else because they acted outside the law?

Yes we're all taking, or are going to take paycuts because the pool of money left in the state is drying up. But this maschoism is misplaced I think - we're doing it because we have to, not because we're culpable.

During the boom poor people who wanted to buy anything had to take out a loan as they were priced out of houses, cars and other major expenditure items. They were offered cheap money by the banks and the level of relative inequality was such that there was social pressure to take on these debts. To blame them now for being hoodwinked is an incorrect appropriation of blame.

That said, anyone who bought multiple properties were and are engaged in property speculation and property speculation is a definite contributor to our current malaise. According to David McWilliams, these people were often professionals looking for investment vehicles and looking to get on the gravy train. I don't doubt that there were some lower level earners doing the same too.

Bit of an incoherent rant there... if they are legally to blame, they will be brought to court. Just note that in Ireland its very difficult to get a conviction of white collar crime. However, what will this solve? Sure it will be nice to see some justice, but its not going to solve anything. Apportioning blame, as you do, is a very subjective matter, and one usually finds, in Ireland especially, that everyone else is to blame!

Claiming people who borrowed were "hoodwinked" is a stretch of the imagination though, the hint is in the name - if you borrow, you must at some point in the future, give it back. There is no way to miss this point, a 5 year old understands the concept of borrowing. So you must conclude that these borrowers wilfully ignored the reality of the situation, and therefore are 100% culpable for their own debts, which they entered into freely.

There was "social pressure" to take on these debts. What age are these poor unfortunates? Are they giving loans to children in the playground now? Social pressure my arse, there was greed, envy and one-upmanship, and a sense of entitlement.