Property Crash: Where to Now?

swirlser

Anyone watch it?

RTE - Guide / Player

I didnt like how closely he paired us with the Finnish scenario. Many aspects are different, they werent trying to recover at the same time as a global economic meltdown and they did step into the EU in the early 90s which brought with it nearly 2 decades of growth. Also our bubble grew quite a bit larger before it burst (lets not forget how many props NAMA have on their books)...

From the show - A pretty optimistic outcome, that the property market will flatline next year and grow after spending a few years in a stabilized condition. Also didnt like that he out-rightly dismissed the chance of Ireland falling out of the euro currency. And that debt forgiveness was not going to happen. (Sounds like RTE set him some boundries, ya know since his last programme caused the burst and all! :pac:)

He may not be far wrong with the timing of some properties hitting the bottom, but I think its going to happen at different times to different sections of the market and so the bottom wont be hit across the country for awhile longer. (And whoever said the upturn could be sudden is absolutely right, its only going to take the banks to turn back on the taps and the market wont know what hit it.)

Admittedly I think Ireland coming out of the euro currency (or it failing) is the much less likely scenario, but Im not sure Id have dismissed the possibility completely.

Debt forgiveness will happen. Not in the way it was being thrown around a few weeks ago, there wont be any blanket issued get-out-of-jail-free cards, but in a renamed and smaller scale, it'll happen for some. Others will find out shortly what options (or "products") will be made available. And what a knee slapper - the banks to review case by case.... Of course they arent going to go through 300,000 mortgages individually to restructure!

(Oh and PS, thanks for spending that much time telling us that 1 beds in the arseholes of nowhere are hardest hit and may be left behind! Pretty sure a sentence woulda sufficed )

D3PO

Pretty good synopsis Id say.

Only point Id pull you up on is debt forgiveness. It wont happen on a small scale going forward. Its already happening

Balmed Out

Agree with what you said but reckon its overly optomistic except for places where there has been a market with houses being bought and sold reguraly ie Dublin / cork / limerick cities. In much of the country property sellers have their heads stuck in the ground with prices that have barely fallen.

Did ye watch frontline afterwards?
You have to feel very sorry for these people but some of their attitudes and what they think is fair is just shocking. There was a woman who bought a million euro home and feels when she found a buyer willing to spend a half million she should be allowed sell it and let the bank take the loss.

swirlser

Balmed Out wrote: »

Did ye watch frontline afterwards?
You have to feel very sorry for these people but some of their attitudes and what they think is fair is just shocking. There was a woman who bought a million euro home and feels when she found a buyer willing to spend a half million she should be allowed sell it and let the bank take the loss.

Could only stomach so much of FL. Let's just say I'm not a fan of the host the audience and panel seemed desperately hand picked. The audience members seemed to have this skewed air of self entitlement and the panel were a bunch of dummies for Mr.-Im-not-taking-a-salary-cut-the-plank to just shout at and appear to be on the side of "the victims". And yes, I saw the lady with the million quid home, was waiting for someone to ask how much of the profit she would have shared with the bank if her property went up in value.... Became clear that wasn't going to happen and soon enough I had my fill of it.

Balmed Out

swirlser wrote: »

Could only stomach so much of FL. Let's just say I'm not a fan of the host the audience and panel seemed desperately hand picked. The audience members seemed to have this skewed air of self entitlement and the panel were a bunch of dummies for Mr.-Im-not-taking-a-salary-cut-the-plank to just shout at and appear to be on the side of "the victims". And yes, I saw the lady with the million quid home, was waiting for someone to ask how much of the profit she would have shared with the bank if her property went up in value.... Became clear that wasn't going to happen and soon enough I had my fill of it.

There was the guy next to her who got a mortgage that will last till he is 71 too. Pat kept on that the tax payer would have to pay for his housing if his hoe was repossesed and that his father was on mortgage too. With the fathers house being used as security and with him being able to pay his 1400 a month mortgage at the moment I cant for the life of me see how that would happen.
Then the public servant who spends 50 a week on cosmetics and clothing and wants the likes of me who spends that in 2 - 3 months to pay her mortgage. She was amazed at the banks attitude that any deal reducing her mortgage would lead to her losing the house. She never specifically said so but id bet it was a second house that she rents out.

jmayo

I thought it was a very poor show which either glossed over important things or in fact left them out entirely.

Finland own currency/coming out of crash into tech bubble.
He compared us to Finland and only made light of fact a big part of their bounce back was due to them having their own currency and they bounced back during the beginning of the telecoms dotcom boom of which they had leading players such as Nokia.

Asking prices comparison
He compared asking prices today, in 1995 and those during bubble.

Big issue with that is the asking prices today (even the sane ones) are something like on average 8/15% above actual sales prices.
Asking prices are lagging behind the market as the prices are continually falling.
Whereas asking prices in 2006 were either exactly sales prices or often below ultimate sales prices.

Buy to lets/investment properties
He showed two families, one of which has had unemployment making mortgage repayment difficult and the other who foolishly bought an apartment at the height of the bubble.

He never appeared to mention the huge chunk of "buy to letters" who are often dependent on rent allowance and who are in serious trouble if interest rates increase.
If this sector is hit it would increase supply drastically.
He never even mentioned that rental market would have dropped a lot more, but for the state rent allowance scheme often keeping an artifical floor in the market.

House prices returning to boom levels
He had that idiot from DIT spouting utter drivel about the house prices being like a ping pong ball held under water.
That idea means that house prices were correct during bubble. :rolleyes:

This show had a primace running through it that house prices will return to the height of the boom levels.
Of course they mention they bottom and then flatline for a few years with growth then returning.

Predicting bottom
Added to that Curran anounced the bottom would be reached next year (2012) and people would not be out of negative equity until 2021 or 2022.

How the fook can he predict that ?

Some other woman announced prices are back at early 2002 and they would only go back to 1999/2000 levels.

A lot of people would say the house prices increases had already started back in the late 90s and then have blip in 2001 only really took off from 2002 onwards.
If anyone cares to look at previous bubbles, the prices usually drop back to levels they were at before the bubble began and not ones already on the upward curve.
That means prices should drop back to levels pre 1999.

This show was much tamer than the original and pretty optimistic.
Pretty poor I thought.

Zamboni

It sounds like Mr Curran has been bought by a VI or two.

Zamboni

Balmed Out wrote: »

Did ye watch frontline afterwards?
You have to feel very sorry for these people but some of their attitudes and what they think is fair is just shocking. There was a woman who bought a million euro home and feels when she found a buyer willing to spend a half million she should be allowed sell it and let the bank take the loss.

She is a disgusting mess but a perfect microcosm of our people.
As a collective, we are a very immature and naieve population who have no grasp of personal responsibility.
We fought for leadership of a nation but when we got it had no idea what to do with it and almost 100 years later we still don't.
Irish people will do whatever the hell they want as long unless there is
a) somebody that has the authority to stop them
and b) is bothered implementing that authority
and c) is capable of implementing that authority.
We are like children without parents/boundaries to steer our behaviour.
And when someone gets hurt we all start crying and blaming each other.

Lantus

Theres a fundematal problem with economies that allow housing and property to increase and decrease in value by so much in such a short amount of time. Economies are now so diverse having one interest rate to control such a rapidly changing beast is just too much of an over simplification.

kennyb3

Thought i was stuck in Nazi Germany during the war with the amount of propoganda and spin going on. Was like a government commissioned program. Get all the vested interest on to give comment - yeah that should work!

A lot of denial still going on.

A lot of key fundamentals mentioned but basically skimmed over and ignored:

- 3/4 difficult budgets
- Massive eurozone crisis
- Low/ no economic growth worldwide (unlike the Finland situation)
- No credit and there wont be for a long time
- Massive oversupply - did Finland have 300,000 vacant properties?

Great thread over on the property pin on this already for anyone thats interested.

As someone said - a lot of brown fingers there from all the bottom picking! The same people who have continually picked teh bottom time and time again and been wrong.

RTE - the governments #1 propoganda machine.

Don't be fooled

Edit: And the program had way way too much focus on how far from peak we are nothing on fundamentals such as price as a factor of salary, interest rates etc.

The whole thing came across to me as showing we are nearly at 50-60% so we must be getting near the bottom. Who's to say we cant go 80-90% from the peak?

the groutch

Didnt see The Frontline, but don't think anyone could take seriously Pat The Plank lecturing people while he's raking in 600k a year of taxpayers' money

fontanalis

Is the fact that a lot people consider property the be all and end all not a bit worrying?

robd

kennyb3 wrote: »

The whole thing came across to me as showing we are nearly at 50-60% so we must be getting near the bottom. Who's to say we cant go 80-90% from the peak?

Indeed. It had a very liberal interpretation of the bare facts.

On average house prices went up 300% from 1996 to 2006. They're down 50-60%. So that's still up approx 60-100% or twice what they were in 1996.

All credit splurged booms have been shown to correct to pre boom levels adjusted for inflation.

You can't really compare Ireland to either Finland or Japan as the article did. Neither of these countries were in the position of not having a currency to devalue or interest rate to control. Neither were they stuck with global stagnant growth due to persistent high oil/energy prices caused by what most commentators refer to as Peak Oil production. Ireland has been left to deflate it's way out of trouble which most economic models consider to be financial armageddon. Our situation is far far bleaker.

The article stinks of vested interest spin. Complete puke.

D3PO

robd wrote: »

Indeed. It had a very liberal interpretation of the bare facts.

On average house prices went up 300% from 1996 to 2006. They're down 50-60%. So that's still up approx 60-100% or twice what they were in 1996.

All credit splurged booms have been shown to correct to pre boom levels adjusted for inflation.

.

True but with that in mind I think thats why some people are thinking we will bottom out next year. If and its a big if we continue the current trajectory of price drops we should get pretty close to 1996 house price levels if you adjust for 16 years of inflation.

Now they talked a lot of ****e on that program but there is albeit an optomistic one an argument that we mgiht bottom at at some point towards Q4 next year.

that would assume a lot of other things would also happen positively aswell though. Including strong global economic recovery, domestic recovery, a clearly communicated mid term budgetary strategy being announced by FG/LAB and a definitive Bank recapitilsation program being announced by the EU or the ECB announcing a quantitive easing program.

Unfortunalty most of these additional factors are unlikely to happen so everything points to house priice falls continuting through to at least 2013

swirlser

kennyb3 wrote: »

The whole thing came across to me as showing we are nearly at 50-60% so we must be getting near the bottom. Who's to say we cant go 80-90% from the peak?

Very much agree with the rest of your post, but not so much this one. Its not to say no properties wont (or havent already!) seen such drops. But in reality, the only places your going to see that level of a drop are people who have no choice, because when you get to that level of a drop - as much as Id love to believe it, since Im looking to buy - people will sooner pull out of selling and wait rather than go to a tenth of (I know I would). But there is no doubt the whole show was overly optimistic and spin driven.

fontanalis wrote: »

Is the fact that a lot people consider property the be all and end all not a bit worrying?

A little

I think the whole glossing over so many important factors in that show annoyed me. It was clear he was on a leash, since his last show caused such outrage, apparently. I really dont get how he can go from saying there are similarities to the Finnish burst to our own and in the next scene its as if thats that - the future has been written (!), Finnish recovery took 4.5 yrs, therefore Ireland will flatline next year... *Hold up!* You got there a little too easy dont you think?

Also he(/they) went very light on how much is predicted to come off, 1 person saying another 10% from peak and another saying '99-'00.

Since I am actively seeking a home (not in any rush), I can tell you after viewing 15 properties, speaking with god knows how many EAs and actually visiting the offices of certain EAs who have an open book policy, that selling figures atm are currently between 14% and 19% off list figures (These properties are 3 and 4 bed houses in the greater dublin area and commuter towns touching Dublin - And given from the show last night these are meant to be the stronger ones, which I do believe, I can imagine you could offer 20-25% off an apartment asking price and likely expect your hand to be taken clean off - as a cash buyer. Also just to note, the one that was 19.1% off to be exact was a very nice 4bed which just went sale agreed I was interested in it and even though it had literally had its price reduced 2 weeks before hand and the whole "massive reduced price for immediate sale", they still shook on another fifth off!). Ive also (should I say this ) 'toyed' with some EAs, on properties Ive no interest in, to see how offers of 20%+ off go down and its very interesting to see how they react and how close to a deal they will come even though initially they'll say it'll never happen at that region. And two properties actually accepted offers of in the region of 20% off, to which I then declined and within days saw the asking price drop (your welcome!).

(EDIT: getting a tad OT, but for the record, I estimate values myself by going on a number of things. l take the lowest identical prop on that street's value as the jumping off point. I get the actual sq ft of the prop which can I just say its un-****************-believable how few EAs have the REAL figure (I know theres a recession going on and your stuck in your '06 730d, but for the love of god buy a measuring tape and add up the figures which I know you have rounded in many cases and then DONT add on another 100-300 sq ft ffs!!). 10k per 1 sq ft, a 25% mark up for the builder and then the trickier part of estimating the sites value, also note that second hand homes, particularly more aged properties arent worth as much. Then doing the good old formula of realistic achievable rent pa multiplied by X (15 for me). Basically using the results to try determine a sane valuation (imo). And every single property I have done this with, the figure I get is greater than 20% off current list prices.)

edanto

swirlser wrote: »

And two properties actually accepted offers of in the region of 20% off, to which I then declined and within days saw the asking price drop (your welcome!).

I think that EAs are starting to factor this into daft.ie asking prices, which makes interpretation of that data a little harder. It could mean that the asking price results start to show a bottoming out when the reality is still dropping.

I thought the show was very weak when it came to fundamentals of valueing property such as rental yield or measures of affordability such as salary multiple.

The presenter sounded muzzled, compared to his previous show which in itself came many years after consensus was achieved on boards about the futility of the 'ladder'.

I think some of the posters here and on the pin could have done a much better job on the programme.

kennyb3

swirlser wrote: »

Very much agree with the rest of your post, but not so much this one. Its not to say no properties wont (or havent already!) seen such drops. But in reality, the only places your going to see that level of a drop are people who have no choice, because when you get to that level of a drop - as much as Id love to believe it, since Im looking to buy - people will sooner pull out of selling and wait rather than go to a tenth of (I know I would). But there is no doubt the whole show was overly optimistic and spin driven.

I agree I don't think we'll see 90% myself, well certainly not in the pale and surrounding area's. We may well see it in those 200 odd S.23 apartments sitting idle in Sligo in a town with a population of 900.

My point was more trying to say that the show had a strong focus on the highest falls - showing a lot of places that fell 60 - 70% already thereby putting the idea into the heads of people that we must be nearly at the magical 70% noted by Morgan Kelly. When in fact in the average is only down 42%, so really there is a long way to go - which mean it wont be the next quarter or the one after that or one after that (despite what Ms. Sherry Fitzgerald would have you believe).

Although more than 70% is feasible - what people seem to ignore is that this an unprecedented time with the global economy tanking, the eurozone crisis and possible break up of the euro, no flow of credit etc.

kennyb3

Also they spent so long analysing out the area's then concluded with 'prices are likely to bottom out next year'. Making such a sweeping statement was the most ridiculous part of the program.

The very least they should be saying is that 'In certain area's of dublin (high income area's), particular types of property (3 and 4 bed semi-d's) may see the bottom towards the end of next year'. I'm not saying id even agree with that but my point is such a broad statement is absolutely idiotic but i guess it makes headlines.

D3PO

swirlser wrote: »

also note that second hand homes, particularly more aged properties arent worth as much.

this I totally disagree with. "New homes" are built like sh*t if anything Id suggest if they had the choice most people would prefer to own a house build pre 95 if they could in the area they want.

as for your valudation method based on the sq footage this is a poor way to value a house. What it would cost to build is irrelevent always has always will be.

D3PO

kennyb3 wrote: »

Also they spent so long analysing out the area's then concluded with 'prices are likely to bottom out next year'. Making such a sweeping statement was the most ridiculous part of the program.

The very least they should be saying is that 'In certain area's of dublin (high income area's), particular types of property (3 and 4 bed semi-d's) may see the bottom towards the end of next year'. I'm not saying id even agree with that but my point is such a broad statement is absolutely idiotic but i guess it makes headlines.

exactly. They seem to have an ingrained thought that the market for every location and every accomadation type rises and falls the same way.

Seriously is it any wonder that there is no irish University in the top 100 globally anymore if this is the kind of economic education we are providing to people ?

Snakeblood

D3PO wrote: »

this I totally disagree with. "New homes" are built like sh*t if anything Id suggest if they had the choice most people would prefer to own a house build pre 95 if they could in the area they want.

as for your valudation method based on the sq footage this is a poor way to value a house. What it would cost to build is irrelevent always has always will be.

I think based on personal experience, I'd prefer something built between the 80s and 90s. Definitely not new, unless it's been built in the last 2 years with current housing regulations and a solvent builder, which is rare enough. Houses in my price range seem to veer between 100-120 square meters for older buildings, to 80+ square meters for the more recent ones. Not moving into an 82 sq. meter place.

kennyb3

D3PO wrote: »

exactly. They seem to have an ingrained thought that the market for every location and every accomadation type rises and falls the same way.

Seriously is it any wonder that there is no irish University in the top 100 globally anymore if this is the kind of economic education we are providing to people ?

Ha ha sure did you see the RTE reporter (DCU qualified with BA in Intl Media) reporting on the Allsops auction about houses making a profit as they went for above the reserve price:(

swirlser

kennyb3 wrote: »

I agree I don't think we'll see 90% myself, well certainly not in the pale and surrounding area's. We may well see it in those 200 odd S.23 apartments sitting idle in Sligo in a town with a population of 900

That was hilarious stuff, he didnt have to go to the other side of the country to find that tho - number of places in Dublin have a few apartment blocks sitting empty (another factor in our recovery not adequately dealt with.)

D3PO wrote: »

this I totally disagree with. "New homes" are built like sh*t if anything Id suggest if they had the choice most people would prefer to own a house build pre 95 if they could in the area they want.

as for your valudation method based on the sq footage this is a poor way to value a house. What it would cost to build is irrelevent always has always will be.

Each and every property differs. Yes there were plenty of boom builders which made houses by pretty much joining 3 parts together that may as well have been air dropped in, then wired up by a teenager... Obviously, you dont want those. As for what I mean by aged properties, Im talking about places greater than 3 decades old which require gutting, new windows, insulating, rewiring ~the lot - again every property is unique. The valuation method your quoting me on, first of all isnt by any means perfect - but if your starting out from scratch trying to figure out a more plausible valuation, its part of a method which certainly beats the pie in the sky anchor figure an EA has decided upon (also the site valuation is part of that particular part your poking at, which is harder to gauge, but again better than whatever the EA is trying to sell you). Do you really care if the EA yaps on that the property has come down 58% from peak times, when still that list figure is suggesting the property should achieve 1,800 pm or that after the build cost the site is valued at over 1/3 of a million...

mrgaa1

Páirc Uí Chaoimh will undergo a massive development now that Cork County Councillors have agreed to sell almost seven acres of publicly-owned land around the flagship stadium to the Cork County Board for €1.7m. This follows years of talks between GAA and city officials with the Cork City Councillors finally voting in favour of the sale 24-6.

That works out at €242,000 per acre - what year is this????? Well done Cork city councillors but as for Cork GAA to pay that much is unreal.

robd

mrgaa1 wrote: »

Páirc Uí Chaoimh will undergo a massive development now that Cork County Councillors have agreed to sell almost seven acres of publicly-owned land around the flagship stadium to the Cork County Board for €1.7m. This follows years of talks between GAA and city officials with the Cork City Councillors finally voting in favour of the sale 24-6.

That works out at €242,000 per acre - what year is this????? Well done Cork city councillors but as for Cork GAA to pay that much is unreal.

Don't think you can look at this as a straight sale price. Recession or no recession.

The GAA really wanted this and the CC didn't have to give it to them. Thus a premium.

I'm sure the CC will have to do a fare amount of upgrading of facilities around the new stadium. This costs money and again justifies a premium IMO.

So they reckon things will bottom out in 2012? :pac:

I'd say there's at least another 4/5 years to go yet.

noxqs

Is there bookies which accept bets on the house price bottom?

I'd like to put my money where my mouth is, and I am confident that 2012 is not the bottom. Instead of writing a long argument about it I'll list the keywords in my mind:

NAMA
Empty housing stock
Emigration
FTBs = Emigrating or renting
Families = Probably almost certainly already in NE.
Euro crisis
Property taxes
Austerity budgets
Public sector salaries (due slashing)

And all the doom and gloom of all the above surely will discourage most buyers to hold out longer than the next 12 months.

RobAMerc

jmayo wrote: »

Predicting bottom
Added to that Curran anounced the bottom would be reached next year (2012) and people would not be out of negative equity until 2021 or 2022.

How the fook can he predict that ?

Never mind how did he predict that, how is this even possible ?
We would need >5% pa house price growth for 10 years to achieve anything like that given that lots of folk have a 90% mortgage on an asset thats depreciated by 50% plus.

How likely is that ?

Duckjob

I was deeply disturbed and dismayed by the spin that ran thick through this program - that current property prices are due to some calamitous blip that is holding back our economy, but fortunately a "recovery" will take hold in a couple of years, sending property shooting back up towards "normality". The ping-pong ball analogy stood out as particularly blatant horsesh*t.

Ironically, it is this very denial of reality that will see any property prices stagnate for many a year to come IMO.

shawnee

I thought that the show was quite good. He gave comparisons with other countries and while no two will compare there is some similarities. The ghost estates in places like Sligo , Leitrim etc will probably never sell and be demolished. Who in there right mind would buy in an estate with 100 houses and around 10 to twenty occupied. I do however believe that in good areas , quality houses will sell. Those that want to sell have brought there prices down and those that want to remain "for sale" will continue to ask unreasonable prices until the banks decide to sell them.
The program suggested a bottoming out of prices in the next year or two and a rise similar to inflation in some areas for the next few years. At 140k for a 3 bed semi in a reasonable area, that seems about right to me. :rolleyes:
However the massive houses in the country will probably not sell, neither will some of the ghost estates but life goes on and people will need houses in the other sector