Property - down, down; how long until dead-cat bounce?

grindle

ToddyDoody wrote: »

...which leads me to ask, niavely i'm sure, is there no stabilizing mechanism for property prices?

The only stabilising mechanism is an increased knowledge of economics, value, and a lack of greed (either on the part of developers, speculators, or the understandably numbers-obsessed nature of a politician).
So no, no true stabilising mechanism, just a blind (impossibly unlikely) hope that all these factors won't play out the same way again...
We sure do love pyramid schemes in this country though.
Luckily for the hardcore gamblers, the house took most of their money this time, so the next should either be much less pronounced, or just as bad, but very far away.

shangri la

saa wrote: »

Yeah funny how shocked people are when they discover their "investments" can do down as well as up or in this implode, my partner wants to get a mortgage to live somewhere nicer but both our jobs are freelance and not steady, I've seen plenty of nice gaffs for around the 200 mark, some for 170 ish that you'd need to put money into anyway and some for 90 k that you wouldn't live in (area wise) if you paid me all in Dublin suburbia that is.

can you give a link to a nice dublin gaf for 200k?

grindle

shangri la wrote: »

can you give a link to a nice dublin gaf for 200k?

Here.

KyussBishop

Interesting article on housing bubbles from a blog I read regularly; take a moment just to look at the graphs in the article (including Ireland's), quite interesting:
http://www.nakedcapitalism.com/2012/03/housing-bubbles-house-prices-and-interest-rates.html

So yea, I would judge just from those graphs alone, houses are still excessively overvalued (duh I guess) and have a long way to drop still.

OfflerCrocGod

Deleted User wrote: »

I don't think that it's a good idea to focus on the median income anymore, mainly because of the recent increases in taxation. Disposable income has declined quite dramatically over recent years as the cost of everyday goods and services have risen relative to gross incomes plus of course all the extra taxation & charges.

While the average punter's income remains depressed so will the average house price, the potential owners have to have the income before they can buy the house, house prices will fall until people can afford to buy.

'Equivalised disposable income' is higher in 2010 then in 2006, Disposable Income Per Person was higher in 2009 then 2006. Median gross household income is the norm by which house affordability is measured and it will continue to be. This time it isn't different, Ireland is no special case.

The average punter is no longer so free with his money or his credit, and long may that continue! I am not calling for a bounce higher in house prices just a stop in price falls; house prices and incomes can both stay flat, nothing impossible with that combination. House prices will fall until it makes no sense to sell, if a bank account yields half what renting the house yields then you would be stupid not to rent. I can offer €1,000 for a new Ferrari, that does not mean the dealer has to accept.

gurramok

grindle wrote: »

Here.

Who wants to live in Balbriggan? Note want, not have to.

Can you provide one in the burbs of Dublin that is not a rough area? There are a handful but curious what you would post

OfflerCrocGod

Deleted User wrote: »

Don't forget that the main problem is the fact that we have far too many houses built in the wrong places

This is a point I was making earlier, houses in the middle of a bog in the middle of nowhere do not affect house prices. You can buy houses in Detroit for a few thousand dollars, do you think that will depressed Dublin house prices? Of course not.

Deleted User wrote: »

and a relatively immobile population due to many people being in houses in the wrong places.

These people are "trapped" because their current houses are unsellable due to their location and are nearly all in negative equity, until the banks bow to the inevitable and allow partial defaults and write off the negative portion of the mortgages these people will remain stuck.

Negative equity mortgages are now being offered, and you can also move your tracker mortgage too. While I would prefer a sane bankruptcy system in this country we won't ever be seeing one so these schemes are the best we have, they should help get some flow going.

Deleted User wrote: »

Cities like Dublin really need new decent urban housing so commuters can live in the same place they work, commuting is such a large (and growing) drain on their income. Too many flats and not enough family homes were built.

So we will have total house prices collapse continuing for years while at the same time having a shortage of sensible housing...People need to live somewhere and if no new houses are being build they will chose what they must.

Deleted User wrote: »

Looking at the stats from the census (robbed from another forum) there's still a lot of slack in Dublin, meaning that more falls in prices are likely.

The vacancy rate is slightly down in the last 5 years.

CSO wrote:

Almost 290,000 homes were vacant on
Census night. As the total housing stock
grew to almost 2 million homes, this gives a
vacancy rate of 14.5 percent.
Although the number of vacant homes rose
by 23,000 since 2006, the vacancy rate
declined slightly by 0.5 percent.
Leitrim had the highest overall vacancy rate
with over 30 percent of homes vacant.
Donegal was next with a vacancy rate of
29%. South Dublin had a vacancy rate of
5%, the lowest in the country.

Again I don't think people will commute from their holiday homes in Leitrim to work in Dublin. With the total death of new housing, obsolescence destroying housing and a growing population we may see a squeeze in a few years time...

OfflerCrocGod

KyussBishop wrote: »

Interesting article on housing bubbles from a blog I read regularly; take a moment just to look at the graphs in the article (including Ireland's), quite interesting:
http://www.nakedcapitalism.com/2012/03/housing-bubbles-house-prices-and-interest-rates.html

So yea, I would judge just from those graphs alone, houses are still excessively overvalued (duh I guess) and have a long way to drop still.

As I said about 16% of which we have taken a drop of ~8% already.

OfflerCrocGod

grindle wrote: »

The only stabilising mechanism is an increased knowledge of economics, value, and a lack of greed (either on the part of developers, speculators, or the understandably numbers-obsessed nature of a politician).
So no, no true stabilising mechanism, just a blind (impossibly unlikely) hope that all these factors won't play out the same way again...
We sure do love pyramid schemes in this country though.
Luckily for the hardcore gamblers, the house took most of their money this time, so the next should either be much less pronounced, or just as bad, but very far away.

Actually the mechanism is increased supply, the problem with Ireland (or one of the problems) was the restrictive planning regime which allowed the initial growth in demand to be catered to by increase in prices instead of an increase in supply. If supply had grown fast enough that initial spurt of prices would have not happened. That would have meant the speculators and hedgers would have not had a reason to start piling into the housing market. They will only pile in if there is substantial house prices positive momentum. Enough supply would have restricted that. Leverage limits are good but even better is a planning system that allows supply to quickly respond to demand. Housing bubbles tend to only occur in countries with restrictive planning policies.

The economic and social impacts of restrictive
land use regulation were also examined by Demographia International Housing Affordability Survey co-author
Wendell Cox in research (The Housing Crash and Smart Growth) published by the National Center for
Policy Analysis. Much of the housing value increase in the bubble occurred in markets with more restrictive
land use regulation. Much more importantly, however, 94 percent of the major metropolitan area house value
losses in the United States occurred in these markets. It was, of course these losses, concentrated in areas
with more restrictive land use regulation that precipitated the Great Financial Crisis. The research noted that
if housing value losses in all markets had been at the rate of major metropolitan areas with less restrictive
regulation, the intensity of the losses would have been cut by three-quarters. This would have made the Great
Financial Crisis less intense and might have permitted it to be avoided altogether

Allow me to flood the market with housing and I will pop any bubble before it forms.

Monty Burnz

OfflerCrocGod wrote: »

Japan. Ireland is no Japan we would have to seriously set out to kill our housing market to achieve what Japan did.



Ireland is not even close to being a Japan. We can produce population growth that most other developed countries would give their right arm for while undergoing one of the deepest, most severe recessions of any economy in the last few decades.

Don't look in the rear view mirror for an indication of the future of our housing market look at the future.
The future is full of more Irish people...and also far fewer new homes then we may expect.

This is simply not sustainable.



You overshoot on the way up and you overshoot on the way down...

Yup. And the overshoot has yet to even begin.

Monty Burnz

ToddyDoody wrote: »

I'm sure there's lots of interesting posts in this thread. Today i stopped in front of an estate agents and was genuinely suprised at how cheap some of the properties in galway were (considering how ridiculously expensive they used to be)

This is your mistake, right here. The bubble price is meaningless - a lie, a fiction. This should take no part in how you value a property.

If I offered you a Mars bar for a thousand euro, it's clearly a rip-off. But if I cut the price to just 400 euro, it's not suddenly a bargain, is it?

Dismiss the bubble price from your mind: just consider how much time and effort each thousand euro takes you to earn and save in an environment of rising costs and taxes. Work up to the price, not down from the bubble make-believe prices that ruined us.

bnt

Monty Burnz wrote: »

Yup. And the overshoot has yet to even begin.

If you want to see an overshoot, try Florida for an idea of just how bad it can get. A 14-year-old schoolgirl has been in the news recently after she bought her own house for $12,000 (€9,000).

https://www.youtube.com/watch?v=GTTczC27fko

The excellent NPR Podcast Planet Money had more details. She raised half the money through selling off the contents of foreclosed houses, some (not all) of which were bought by her mother, and other things people throw away. She's not legally allowed to own a house at her age, so her mother is the owner of record and loaned her half the money. But it's her house, and she's already making money from tenants - and there's no mortgage to service.

RiseToTheTop

My uncle paid £2000 for his house back in 1976. 3 bedroom house which would have been over €250,000 during the boom.

I want prices to be back down to that level. (in line with inflation.)

donegal_road

RiseToTheTop wrote: »

My uncle paid £2000 for his house back in 1976. 3 bedroom house which would have been over €250,000 during the boom.

I want prices to be back down to that level. (in line with inflation.)

the other thing is that most people didn't do 1 very simple calculation when they were signing up for a mortgage during the great delusion..

€250k borrowed @ 5% for 25 years = €438,442 total repayment

How is that good value? who ever said renting was dead money? :pac:

OfflerCrocGod

Pretty much what I said. The way things are going we will have a serious surprise in a few years time. Babies, they'll be our salvation.

Robdude

Prices are still way to high for me to consider paying them.

I feel bad for those of you with big mortgages, but not bad enough to take them off your hands

Dubit10

Still crazy asking prices around tbh. I noticed a three bed semi in stillorgan asking price 330,000.:D The delusion out there never fails to amuse me.

gurramok

OfflerCrocGod wrote: »

Pretty much what I said. The way things are going we will have a serious surprise in a few years time. Babies, they'll be our salvation.

Will they have jobs in 25-30years time and have a willingness to buy instead of rent or emigrate?
We'll all be old people by then so that salvation is fairytale stuff.

gurramok

gurramok wrote: »

Will they have jobs in 25-30years time and have a willingness to buy instead of rent or emigrate?
We'll all be old people by then so that salvation is fairytale stuff.

If the changing trend of employment over the past 25 years or so is anything to go by, the only jobs left in Ireland will be in retail and agriculture, everything else will be in the far east!

Add diminishing fuel supplies to the mix and buyers will be few and far betweem.

grindle

gurramok wrote: »

Who wants to live in Balbriggan? Note want, not have to.

Can you provide one in the burbs of Dublin that is not a rough area? There are a handful but curious what you would post

I found a nice house in a middle-of-the-road part of Dublin.

Here's a crap house in an apparently nice area.

It's not like I was insinuating anybody should move anywhere.
I think anyone buying a house now needs a psychiatric evaluation, and that anybody who buys a house as a cashing-out investment should be drowned politely told that they're not helping anybody's situation, including their own.
Thought that ten years ago, think it now.
Best thing about this recession is the amount of absolute d!ckheads who've lost everything.
De-fukcing-lighted.

If you don't need to live in it, don't buy it.
If nobody else is likely to rent it off you at whatever exorbitant rate you want to charge, don't buy, or charge less.

Doc Ruby

grindle wrote: »

If you don't need to live in it, don't buy it.

What about all those people who want to rent or aren't in a position to buy? The much reviled (and often deservedly so) Irish landlord does have a legitimate role to play.

OfflerCrocGod

Dubit10 wrote: »

Still crazy asking prices around tbh. I noticed a three bed semi in stillorgan asking price 330,000.:D The delusion out there never fails to amuse me.

Asking prices are delusional but those aren't what indexes are based on, the CSO index is based on actual sales. I can bet you no one is getting asking prices now a days, if you want something you go in with an offer 30% below asking if it's delusional and see what response you get. If it's reasonable then 10-15% below. Those are the prices that go into the CSO index. NAMA and AIB are saying we've hit 60% drop or so and 330,000 for a three bed in stillorgan isn't a 60% drop. That person is meaningless, delusional and not selling.

OfflerCrocGod

gurramok wrote: »

Will they have jobs in 25-30years time and have a willingness to buy instead of rent or emigrate?
We'll all be old people by then so that salvation is fairytale stuff.

That's true it will be a rerun of the 1980's when everyone left the country and twenty years afterwards the country was deserted.

Utterly empty.

Apart from all the people who give us our highest population for 150 years.

Apart from them, empty.

*tumbleweed*

OfflerCrocGod

Doc Ruby wrote: »

What about all those people who want to rent or aren't in a position to buy? The much reviled (and often deservedly so) Irish landlord does have a legitimate role to play.

They've left the country, did you not get the memo?

Monty Burnz

OfflerCrocGod wrote: »

That's true it will be a rerun of the 1980's when everyone left the country and twenty years afterwards the country was deserted.

Utterly empty.

Apart from all the people who give us our highest population for 150 years.

Apart from them, empty.

*tumbleweed*

Yes, we had the demographic argument during the bubble too. Remember all those immigrants who were going to drive prices ever upwards? How did that work out again?

OfflerCrocGod

Monty Burnz wrote: »

Yes, we had the demographic argument during the bubble too. Remember all those immigrants who were going to drive prices ever upwards? How did that work out again?

I'm not saying that prices will be driven ever upwards, I'm saying that writing off house prices due to depopulation is plain silly. It's just not happening.

Prices in Ireland are now more affordable then almost all other English speaking countries except for the US. Given that US house prices will bottom this year and have been falling slower then Irish ones I think Ireland will this year become the most affordable English speaking country in the world. This is a boon to the country and I think will result in a slowdown/bottom within a year (Spring 2013?).

In London €550 will rent a *room* in a shared house and houses are easily €300,000+, at this stage you could almost buy two houses in a place like Dublin 15 for the price of one in London and get a better quality of life, don't even talk about crazy Oz or Canada (not all of it but some parts are very expensive.). Something like this is the lap of luxury compared to places I've stayed in. For almost the same money!
Things aren't as awful as you all may think.

Monty Burnz

OfflerCrocGod wrote: »

I'm not saying that prices will be driven ever upwards, I'm saying that writing off house prices due to depopulation is plain silly. It's just not happening.

Oh yeah, I agree with that. There are dozens of other perfectly good reasons to write off house prices.

OfflerCrocGod

Monty Burnz wrote: »

Oh yeah, I agree with that. There are dozens of other perfectly good reasons to write off house prices.

As everyone knows trends continue forever. Can't wait until you get paid to buy a house.

Monty Burnz

OfflerCrocGod wrote: »

As everyone knows trends continue forever.

No, they don't. But they trend years past the point where they should inflect - if you didn't notice that during the bubble, you'll never understand it now.

grindle

Doc Ruby wrote: »

What about all those people who want to rent or aren't in a position to buy? The much reviled (and often deservedly so) Irish landlord does have a legitimate role to play.

Ah yeah, thought the second half of my statement might have clarified any unidentified thoughts re: renting. I've no problem with landlords making a wage, but the scalping that was going on was unbelievable. Landlords raising the rent in line with what the mortgage would be to buy at the height when they bought it for three times less a decade ago was ridiculous.
When you look at it singularly as one person saying "well, this is happening, so I'll take advantage" you'd think "Okay, rent from someone else, it keeps the balance.", but when every single one does it, a market of choice doesn't exist anymore and it's an unspoken, crowd-sourced cabal, no better than serfdom for the middle-classes or under.
(Before anyone jumps in to say "You can't compare us to SERFS!!!", it's relative to how we live, not how THEY lived. Even the poorest council-dwelling-dwellers in Ireland can phone someone on the other side of Earth nowadays, if they save up €5. Even at our worst, in this climate, we are extremely spoilt by the futurism we live in. Like the case of the London rioter who felt owed PS3 games, but he had a PS3. That is an incredible [in the undiluted, most literal meaning] sense of entitlement).