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Property Bubble Mark II
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09-10-2011 2:26pm#1
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The thing is, as soon as people can borrow they will. Irish people (by and large) appear to have learned very little and are still irrationally attached to property. I'd be highly surprised if prices don't go back up before busting again. A responsible government would introduce legal maximums (wage ratio) to prevent over extension and thereby preventing another bubble, but the government appears to think that increasing property prices are a good thing
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The thing is, as soon as people can borrow they will. Irish people (by and large) appear to have learned very little and are still irrationally attached to property. I'd be highly surprised if prices don't go back up before busting again. A responsible government would introduce legal maximums (wage ratio) to prevent over extension and thereby preventing another bubble, but the government appears to think that increasing property prices are a good thing
Or else they're thinking "the public won't vote me in again if i don't give them what they want"0 -
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I think it was Alan Barret from the ESRI who made the point that there has been a growing number of young 30 somethings with a large cash pile waiting for the bottom of the market....and ready to take the plunge.
I'm one
I'm not desperate to buy either, thats a difference to the bubble madness. I will buy when I see value for money.
On the point of demographics, its the Irish adults(who usually buy) that are emigrating to be replaced by immigrants who rent(replacing both sets who previously left).
At present prices, alot of housing is still dictating that you need 2 buyers to buy a unit along with the usual job security and hefty deposit. Along with bust banks, there are too many factors weighing against the so called expert in the article.0 -
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I'm one I'm not desperate to buy either, thats a difference to the bubble madness. I will buy when I see value for money.
On the point of demographics, its the Irish adults(who usually buy) that are emigrating to be replaced by immigrants who rent(replacing both sets who previously left).
At present prices, alot of housing is still dictating that you need 2 buyers to buy a unit along with the usual job security and hefty deposit. Along with bust banks, there are too many factors weighing against the so called expert in the article.
I have a feeling that the Gov will try and prod people like you into buying. So they will announce a raising of stamp duty in 12 months or so in the next budget from 1% back to 3% or something
Now if you believe that your target house will continue to fall at 10-15% next year that wont affect you. If you are looking at a well situated 3-4 bed semi in a city, you may start to twitch.0 -
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The Dutch OAP has probably lived life to the full and gone on 2 or 3 holidays a year for the last 30 years, has never had to worry about any building maintenance and will live in a rent controlled apartment until the end of their days, covered by their generous pension that they've built up for themselves instead of paying a mortgage. It's not as clear cut as you make outJazlyn Huge Rodent wrote: »Owning your own home is better, the problem is people overstretching themselves and being lent sums of money they shouldnt.
I always find this discussion amusing, as if people are stupid if they want to own a home rather than rent.
Who is in the better position, the dutch person who rents their whole life and has nothing to show as they hit old age, or the Irish person who ends with something tangible that they own? 0 -
The Dutch OAP has probably lived life to the full and gone on 2 or 3 holidays a year for the last 30 years, has never had to worry about any building maintenance and will live in a rent controlled apartment until the end of their days, covered by their generous pension that they've built up for themselves instead of paying a mortgage. It's not as clear cut as you make out
Paddy wouldn't let that happen though. He would be upping the rents as often as he could to pay for the Land Rover and the fancy house. We still have a screw thy neighbour attitude here unfortunately.0 -
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Jazlyn Huge Rodent wrote: »Owning your own home is better, the problem is people overstretching themselves and being lent sums of money they shouldnt.
I always find this discussion amusing, as if people are stupid if they want to own a home rather than rent.
Who is in the better position, the dutch person who rents their whole life and has nothing to show as they hit old age, or the Irish person who ends with something tangible that they own?
whilst I don't necessarily disagree with what you're saying here, it's worth noting that as most people get older, the desire for wealth and property tends to diminish. It would be nice to sit in a house and know that it belongs to you in the fullest sense of the word but when you lay on your deathbed, all the years of paying off a mortgage might not seem too worthwhile.
Just my thoughts 0 -
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Why is it that the notion of 'having something to show' after paying a mortgage for 1/3rd or more of ones life doesn't seem to bother people in the Nordic part of the continent as much as here ?
What are you going to do once you 'own' it ? Sell it? After paying back twice the initial sum, how much is gained in real terms after inflation? And more importantly - then what? Rent?
Pension schemes are where the money should be for long term security.
The Dutch, the Germans, the Scandinavians and so on - have very decent rental accommodation, at fair prices - many of these countries even have inspectors to value rentals to make sure the price is fair, and if not, it's enforced that the landlord pay back with interest from the lease start until the day of inspection. So that keeps prices in line with the true market value.
The long term leases are usually until the renter moves out, not fixed term. Comes usually unfurnished so the renter has their own furniture and takes it with them when they move.
Cost of accommodation is be it mortgage or rent is really just a cost of living. I think many would be quite happy accepting that if Ireland had proper regulations in place, which is far from the case as it is now. It's a bit of a wild west in fact.
Many people grow up in apartments, there is nothing wrong with that. There's parks and playgrounds and communal areas so who needs a back yard, and a wee front garden ?
To be perfectly honest, I don't like renting, here - and would prefer my own place. But that is solely because of the awful state of the Irish rental market.
I'd prefer to rent, save money in stocks and bonds plus pension scheme, rather than rely on an illiquid 'asset' such as a house to have 'something to show' in my old age. I'd say being better off is quite subjective. It all depends how you manage money in the end and what you value. But being 70 or what the pension age will be when its my time, sitting in a house I just barely finished paying off - wouldn't make me feel very rich or secure if I had no other savings or pensions in place. Especially since property taxation may very well go the way of the rest of Europe, I don't know how much it is exactly but 1% of the value of the house or something per year I think? What is fact now may very well change in 30 years if not sooner.
I agree with most of your post. Why do people put so much emphasis on owing a property. If you get a mortgage you will not own you home until the mortgatge is paid back and that be up 30 or 40 years depends on your ability to pay it back and if you do not remortgage it to pay for its up keep also depends that you will not lose your employment though ill health or made redundant.
Also if you get a mortgage you will be tied to that for god knows how long and not free from the responsiblity of it to do as you want until you get a tenants to pay for the monthly payments more hassle.
I purchased my home in UK and it was not fun when you lose your ability to pay for it and all the costs around it, include mortgage equivalent to rent of course, council tax (you pay for this in rented property as well) insurances, water rates, maintenance of property and that can be no fun when you get older, as you will not be able to do any DIY as when did when you were younger and of course the garden that is a big hassle in itself if you are suffering from any kind of age related conditions, unless you are very lucky you will get these conditions with ageing.
Renting was a god send foir me, no more worry about any of the above, let someone else do it and you will live longer.
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You know whats the worst part is people
The FF government wanted and fueled a property bubble since it brought in money and allowed them to bribe the population for a long long time
The FG/Lab government must be also secretly hopping for a "correction" and "recovery" (note how the "correction" and "recovery" words were used on yesterdays RTE docu, as if high prices are "normal" and "desirable") since NAMA (yes i know its FF/Greens bastard child) is making a farce of the market and they need NAMA and Banks to work out (and not cost em more, making them make tough decisions)
We live in a state where the whole governing and professional (solicitors, engineers, accountants) and public (gardai with multiple BTLs bought on nice salaries) sections of society are involved heavily and praying for a "recovery to normal", all while the renters (and this is spoken as home-owner who rented) and taxpayers are being screwed, and dont forget the banks the recent "mortgage forgiveness" drive could be fueled by them since it would mean the banks would get the money not from those who own it to them but from the bigger group of suckers called the taxpayer.
For all the talk of turning the corner we get here, once again I ask, what has changed to reform the broken system?
People feel rich when their homes were rising in value. The average employee did not worry so much about getting a pay rise because they felt rich by their home/houses going up in value and of course selling their home would bring in a lot of case for them. The government wants to back to this feel good scenario making lots of money for them as well as solicitors and the other professionals for doing very little for it.
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People feel rich when their homes were rising in value. The average employee did not worry so much about getting a pay rise because they felt rich by their home/houses going up in value and of course selling their home would bring in a lot of case for them. The government wants to back to this feel good scenario making lots of money for them as well as solicitors and the other professionals for doing very little for it.
And thats why I am afraid we are doomed to repeat the same mistakes, despite all the "turned the corner" talk we get here, no frigging lessons have been learned and nothing is in place to prevent repeat such as:
* nonrecourse mortgages,
* personal bankruptcy like US,
* income to loan ratio limits,
* % loan limits,
* transparent price/area database
* banking failure resolution (denmark is getting there)
* eu wide deposit protection like FDIC
* the Regulator actually doing their job :rolleyes:
* separation of depositors and bondholders
* rental legislation
that's just top of my head
I swear nothing has been done, if we do enter another bubble it be an even bigger tragedy0 -
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