Dead Cat Bounce

davet82

Well it seems the cat is a Dublin cat

Are we in a price bounce on Dublin property that had been predicted by the likes of David McWilliams or is it upwards and onwards from here on in or maybe we'll just bobble along from here on in for the next few years...

I think we definitely saw the bottom (so far) in the first half of 2012 with prices creeping up with MIR which I had expected but what I didn't expect was the lack of decent housing after a surge in buying (there were more houses bought in Dublin in December alone than the first three months of this year). So because demand and supply is balancing out we seem to have held on to these gains, my questions is though are these gains sustainable?

Are there really enough decent BTLs in distress that will be repo'd? How many of these would actually be in Dublin and would the banks manage the repos that they would only trickle on to the market, more money borrowed to pay towards the ill advised lending to others if you know what I mean...


This is all a guessing game of course...

Interested in peoples opinions on if this is 'the bounce' and if so when will it end?

desertcircus

Something I'm curious about but haven't seen much on is whether we can be said to have a recovery without analysing the number of sales relative to historical data. If only one house was sold in the whole of May this year and it got half a million euro, nobody would seriously claim it represented a recovery, but we seem to be having long discussions about whether recovery is here without really looking at the fact that transactions by volume are at 5-10% of what they were at the peak. That level of transactions was obviously unhealthy and unsustainable, but there is surely a "normal" level of transactions, and it's surely a great deal higher than the current figures. We're furiously arguing over whether the numbers mean we're recovering while ignoring the fact that the size of the market itself has fallen off a cliff.

Scortho

davet82 wrote: »

Well it seems the cat is a Dublin cat

Are we in a price bounce on Dublin property that had been predicted by the likes of David McWilliams or is it upwards and onwards from here on in or maybe we'll just bobble along from here on in for the next few years...

I think we definitely saw the bottom (so far) in the first half of 2012 with prices creeping up with MIR which I had expected but what I didn't expect was the lack of decent housing after a surge in buying (there were more houses bought in Dublin in December alone than the first three months of this year). So because demand and supply is balancing out we seem to have held on to these gains, my questions is though are these gains sustainable?

Are there really enough decent BTLs in distress that will be repo'd? How many of these would actually be in Dublin and would the banks manage the repos that they would only trickle on to the market, more money borrowed to pay towards the ill advised lending to others if you know what I mean...


This is all a guessing game of course...

Interested in peoples opinions on if this is 'the bounce' and if so when will it end?

There is certainly enough btls in distress. Landlords buying at yields of 1-2% are never going to make good investments so I can see a lot of them getting repossessed.
The biggest issue with dublin is the supply of good quality family homes in settled areas. People don't want houses built in the last 10 years, unless they're of extremely good quality but a lot of what was built was shoddy.
Where dublin property is going is a tricky one. Most btls are apartments and most of the demand for houses at the moment are young families or professionals looking to start a family in the next few years. I don't think they're going to want to live in apartments.
Repossessing btls in arrears will have an effect on dublin property prices, but it's hard to see how they'll have an effect on three bed semis in terenure.
If repossessions of family homes do occurr, it won't be until the latter end of 2014 to the start of 2015.
Question is how many 3 bed semis in arrears, are in the sought after d6 area?
Dublins property market, is itself made up of many markets.

galwayjohn89

Probably a stupid question but what is btls?

Ritchi

Vuzuggu wrote: »

Probably a stupid question but what is btls?

Buy to lets

by the seaside

Scortho wrote: »

There is certainly enough btls in distress. Landlords buying at yields of 1-2% are never going to make good investments so I can see a lot of them getting repossessed.
The biggest issue with dublin is the supply of good quality family homes in settled areas. People don't want houses built in the last 10 years, unless they're of extremely good quality but a lot of what was built was shoddy.
Where dublin property is going is a tricky one. Most btls are apartments and most of the demand for houses at the moment are young families or professionals looking to start a family in the next few years. I don't think they're going to want to live in apartments.
Repossessing btls in arrears will have an effect on dublin property prices, but it's hard to see how they'll have an effect on three bed semis in terenure.
If repossessions of family homes do occurr, it won't be until the latter end of 2014 to the start of 2015.
Question is how many 3 bed semis in arrears, are in the sought after d6 area?
Dublins property market, is itself made up of many markets.

I'm an interested observer form England, and also with family in Spain. What appears to have happened in Spain is that the banks were reluctant to repossess or would repossess but not put on market. My mum has just bought a house out there (not new build and in an established village location) that the bank put on at E50k and sold to her for E39k - very significant write down on mortgage debt we can assume and a big drop in value.

Anecdotally, what appears to be happening is a shift from a banking solvency crisis to a liquidity crises. During the solvency crisis phase, the banks preferred to keep the property / debts on their books at an inflated property value. However, as it turns into a liquidity crisis, the banks must raise cash and the properties go for the true (fire sale) market value.

As I say, I'm overseas but visit Ireland often enough. As long as the banks in Ireland have a solvency crisis but not a liquidity crisis, they will not repossess as this will exacerbate the solvency problem (not in reality as the values applied to distressed mortgage properties are fictional). It will need to move into the liquidity crisis stage, I think before there is action. Will the state / troika be willing and able to prevent a liquidity crisis? Is there no danger of this because the economy / banking system can limp along as it is? Have I got this completely wrong?

davet82

desertcircus wrote: »

Something I'm curious about but haven't seen much on is whether we can be said to have a recovery without analysing the number of sales relative to historical data. If only one house was sold in the whole of May this year and it got half a million euro, nobody would seriously claim it represented a recovery, but we seem to be having long discussions about whether recovery is here without really looking at the fact that transactions by volume are at 5-10% of what they were at the peak. That level of transactions was obviously unhealthy and unsustainable, but there is surely a "normal" level of transactions, and it's surely a great deal higher than the current figures. We're furiously arguing over whether the numbers mean we're recovering while ignoring the fact that the size of the market itself has fallen off a cliff.

Nicely put, it actually seems a little senseless trying to predict small quantities of sales of small quantities of property with little data.

The PPR is a funny one to try figure out what is going on I find, I always thought of it this way when reading about so called price rises...

5 houses sell for 100k in January so the average house in the area is 100k obviously

in February another 5 houses sell, 4 for 100k and 1 for a million the average has no been distorted and we now have a price rise in the average house

Scortho wrote: »

There is certainly enough btls in distress. Landlords buying at yields of 1-2% are never going to make good investments so I can see a lot of them getting repossessed.
The biggest issue with dublin is the supply of good quality family homes in settled areas. People don't want houses built in the last 10 years, unless they're of extremely good quality but a lot of what was built was shoddy.
Where dublin property is going is a tricky one. Most btls are apartments and most of the demand for houses at the moment are young families or professionals looking to start a family in the next few years. I don't think they're going to want to live in apartments.
Repossessing btls in arrears will have an effect on dublin property prices, but it's hard to see how they'll have an effect on three bed semis in terenure.
If repossessions of family homes do occurr, it won't be until the latter end of 2014 to the start of 2015.
Question is how many 3 bed semis in arrears, are in the sought after d6 area?
Dublins property market, is itself made up of many markets.

Good points here too. Each area is its own little market at the moment I suppose and each area will be more rented accommodation than others. I'm imagine the D6 or 4 areas would be pretty immune to BTLs situation?

take Blanchardstown/Dublin 15 area, I'd reckon they would be pretty venerable in regards to property prices with a high volume of BTLs in the area but the question still remains are these the ones in trouble...

Dades

I don't see repossessions making even a ripple in the current Dublin family home market.

Supply is starved, and there may be a lot of people who've waited during the drop to get into the market. Perhaps this demand will abate somewhat, or perhaps the baby boom of the last 5 years or so will maintain the demand for family homes indefinitely.

With all the negative equity around, as well as people on trackers, prices will have to increase before more people can/will sell. Until then, buyers will be fighting over executor sales like they are today.

It's all f*cked up basically, and nobody knows what way it's going to go. If I had to throw my hat in the ring, I'd say it's more likely this market will see slow price strengthening rather than any slip backwards. Any further declines, imo, will be restricted to apartments, or further out commuter belt housing.

Basically there's no dead cat afaic.

gaius c

Dades wrote: »

I don't see repossessions making even a ripple in the current Dublin family home market.

Supply is starved, and there may be a lot of people who've waited during the drop to get into the market. Perhaps this demand will abate somewhat, or perhaps the baby boom of the last 5 years or so will maintain the demand for family homes indefinitely.

With all the negative equity around, as well as people on trackers, prices will have to increase before more people can/will sell. Until then, buyers will be fighting over executor sales like they are today.

It's all f*cked up basically, and nobody knows what way it's going to go. If I had to throw my hat in the ring, I'd say it's more likely this market will see slow price strengthening rather than any slip backwards. Any further declines, imo, will be restricted to apartments, or further out commuter belt housing.

Basically there's no dead cat afaic.

Your understanding of supply and demand is a little bit off there.

Galego

Dades wrote: »

I don't see repossessions making even a ripple in the current Dublin family home market.

I would disagree on the above statement but this is just my opinion.

If banks went on today and repossessed all those households (BTLs or not) and threw them for sale in the market, surely that would affect ALL house prices. The market would be over-flooded with new stock (bad or good) and surely would react to it in some way.

I think people in this country still do not understand the hole of debts which banks face with mortgage in arrears. There could be potentially 25% of households in Ireland in arrears. This is in a time in which the ECB rate is at a historical low.

davet82

Galego wrote: »

If banks went on today and repossessed all those households (BTLs or not) and threw them for sale in the market, surely that would affect ALL house prices. The market would be over-flooded with new stock (bad or good) and surely would react to it in some way.

If they would then you would be right but they wont I reckon.

Dades

gaius c wrote: »

Your understanding of supply and demand is a little bit off there.

Waiting for yours.

gaius c

Dades wrote: »

Waiting for yours.

It's the bit where you suggest that prices have to increase in order for houses to start selling that makes me think that.

pburns

OP hits nail on head for me - the end of MIR lead to a lot of properties being sold Q4 2012 and a resultantant shortage in early '13 meant prices remained stronger than mid-2012.

However I've been away for a few weeks and it seems at a quick glance - for the first time in a long time - new apts are being added at a greater rate than I've seen in the last 5-6 months. Maybe the natural supply is kicking back in or some are beginning to believe the game is up for debt forgiveness for the BTL sector. Maybe sellers are all thinking prices are off the bottom because of scarcity! I don't know...

Also, there seems to be a concerted effort by the EA industry to muddy the waters for the price register - not including size or details of properties and making sure the old ads no longer available on a Google archive search. I think there's been a lot of BS built around a small number of MIR-related purchases late 12 and to an extent early 13...

Glenbhoy

gaius c wrote: »

It's the bit where you suggest that prices have to increase in order for houses to start selling that makes me think that.

Prices have to increase in order for vendors to take an interest in selling though.

gurramok

Glenbhoy wrote: »

Prices have to increase in order for vendors to take an interest in selling though.

Perhaps the Indo's propaganda machine of "prices are rising" has helped to persuade vendors to put their properties on the market? Maybe the gullible have fallen for it

gaius c

Glenbhoy wrote: »

Prices have to increase in order for vendors to take an interest in selling though.

So everybody in the country sits on their property until buyers stump up cash that they don't have in order to pay what the seller thinks it's worth?
How long will this take?

Got news for you, an asset is only worth what a buyer is willing (or is able) to pay for it.

The Spider

Of course people won't sell unless they have to, that's why supply is so tight in Dublin, only people selling are those who absolutely have to.

smellslikeshoes

gaius c wrote: »

So everybody in the country sits on their property until buyers stump up cash that they don't have in order to pay what the seller thinks it's worth?
How long will this take?

Got news for you, an asset is only worth what a buyer is willing (or is able) to pay for it.

Not wanting to sell is only one part of it though, there is a serious amount of people that are in negative equity and couldn't move if they wanted to.


I personally think that until there is a decent number of repossessed properties released for sale to get things moving again it's just going to continue to stagnate for years to come. Any of these small monthly rises that have sporadically appeared and will continue to appear are not a sign of recovery and are just a sign of a broken market where the usual movements just aren't happening.

The Spider

There isn't going to be a huge amount of repossesed properties, released at once (why do people think this is going to happen?) if the government or NAMA can prevent price drops they will, it's in everyone's interests to have property prices rising, the government gets more tax, owners are no longer in negative equity, if a bank does reposess they can sell the asset and cover costs.

House owners feel richer they spend in the economy, the economy rises, the only beneficiaries of low house prices are people renting and looking to buy something cheap, and as far as the country is concerned they are vastly outnumbered by owners, who are more likely to vote in elections as they don't move around as much.

Anybody hoping for a cheap house, I've got news this isn't a dead cat it's a recovery prices are rising and will continue to do so!

gaius c

The Spider wrote: »

Of course people won't sell unless they have to, that's why supply is so tight in Dublin, only people selling are those who absolutely have to.

Dead right. If I was allowed to live in my house mortgage-free, I'd be pretty slow to sell up too.

Galego

The Spider wrote: »

it's in everyone's interests to have property prices rising, the government gets more tax, owners are no longer in negative equity, if a bank does reposess they can sell the asset and cover costs.

Sorry but I do not agree at all with the above statement.The longer that mentality stays in Irish people's head (high property price = good wealthy economy), the longer it will take for a possible economy recovery in this country.

Just look at Germany's house prices for the past 10 years.

Glenbhoy

The Spider wrote: »

Anybody hoping for a cheap house, I've got news this isn't a dead cat it's a recovery prices are rising and will continue to do so!

I think you forgot to insert "in my opinion" there. It's all about opinions, you're entitled to yours and only time will tell.

As for looking for a cheap house, that would be great, but the majority would be happy getting something half decent which they can afford. Unfortunately to buy in the 400K odd price bracket, one essentially has to be in the top 10-15% of earners, in my opinion it doesn't make sense that a couple with income in that bracket can afford at best a 3 bed semi in d6w. Equilibrium seems a little out of kilter as befits a market where there is massive interference.

The Spider

Galego wrote: »

Sorry but I do not agree at all with the above statement.The longer that mentality stays in Irish people's head (high property price = good wealthy economy), the longer it will take for a possible economy recovery in this country.

Just look at Germany's house prices for the past 10 years.

It's not about that mentality, there's too many interests, you may point to Germany, but we're more closely aligned to the states and Britain in terms of our way of thinking.

And even when people want low house prices, as soon as they buy they switch camps and immediately hope it's the bottom and prices rise, so anyone who says 'great house prices are falling, think I'll buy one' as soon as they do they're on the opposite side of the fence.

Like I said when that kind of money is involved everyone gets selfish and wants prices to rise.

Scortho

Anyone else seeing btls being packaged off and sold in blocks to institutions and funds?
It'd be a good way to sell tenanted units by the banks and prevents the whole firesale aspect. Instead of 1000 btls going onto the market you could have 20?

If you look at the gasworks, the block of apts in rathgar and clancy quay they seem to selling them this way, instead of individual units. Faster for the bank to shift a 100 lot of apartments in one go, than 100 individual apartments.

Ok the above example has all of the apartments in contained in the one unit but I'd still wager that 50 apartments in one lot in the same area would be attractive to the likes of kennedy wilson and such, especially if they are sold at yields of 10+%.

The Spider

Glenbhoy wrote: »

I think you forgot to insert "in my opinion" there. It's all about opinions, you're entitled to yours and only time will tell.

As for looking for a cheap house, that would be great, but the majority would be happy getting something half decent which they can afford. Unfortunately to buy in the 400K odd price bracket, one essentially has to be in the top 10-15% of earners, in my opinion it doesn't make sense that a couple with income in that bracket can afford at best a 3 bed semi in d6w. Equilibrium seems a little out of kilter as befits a market where there is massive interference.

Plenty of houses below 300k, the problem is everyone wants to live in south county Dublin, which was always a premium area, there's this sense of entitlement about that people who called the crash that they feel they deserve a house in south county Dublin for below 300k.

Sorry but this is the most desirable area in the entire country and will always be out of reach of people on average or just above average wages.

Anynama141

The Spider wrote: »

There isn't going to be a huge amount of repossesed properties, released at once (why do people think this is going to happen?) if the government or NAMA can prevent price drops they will, it's in everyone's interests to have property prices rising, the government gets more tax, owners are no longer in negative equity, if a bank does reposess they can sell the asset and cover costs.

House owners feel richer they spend in the economy, the economy rises, the only beneficiaries of low house prices are people renting and looking to buy something cheap, and as far as the country is concerned they are vastly outnumbered by owners, who are more likely to vote in elections as they don't move around as much.

Anybody hoping for a cheap house, I've got news this isn't a dead cat it's a recovery prices are rising and will continue to do so!

Yeah it really is in everyone's interest to have a basic requirement for living to get more expensive - sure doesn't everyone celebrate increasing fuel prices, more expensive food and heating?

Holy god.

desertcircus

The Spider wrote: »

Plenty of houses below 300k, the problem is everyone wants to live in south county Dublin, which was always a premium area, there's this sense of entitlement about that people who called the crash that they feel they deserve a house in south county Dublin for below 300k.

Sorry but this is the most desirable area in the entire country and will always be out of reach of people on average or just above average wages.

Given that you'd need an income of about 80k to qualify for a mortgage of 300k, I really don't see why south Dublin is different enough to sustain those kinds of prices. What percentage of the population is that? How does it compare to the percentage of housing that's in those areas?

We're talking about a recovery based on asking prices, while the size of the market is a twentieth of what it was. If Tower Records increased the price of CDs tomorrow, would we be describing the CD market as recovering? Of course not.

The Spider

Anynama141 wrote: »

Yeah it really is in everyone's interest to have a basic requirement for living to get more expensive - sure doesn't everyone celebrate increasing fuel prices, more expensive food and heating?

Holy god.

That argument doesn't stand up when it comes to buying a house, you are using the rising cost of utilities and services against the rising cost of an asset someone has invested in? You can use that argument against the rising cost of rent as it's an outgoing cost with no return.

Put it this way if you invest your money in shares do you want to see that price drop? If you have a pension that you invest in do you want to have less than you put in when you cash in, all of this applies to people buying houses.

The Spider

desertcircus wrote: »

Given that you'd need an income of about 80k to qualify for a mortgage of 300k, I really don't see why south Dublin is different enough to sustain those kinds of prices. What percentage of the population is that? How does it compare to the percentage of housing that's in those areas?

We're talking about a recovery based on asking prices, while the size of the market is a twentieth of what it was. If Tower Records increased the price of CDs tomorrow, would we be describing the CD market as recovering? Of course not.

Nope recovery is based on supply and demand, as it always was, if those prices are being achieved, then thats the new baseline, recovery was always going to begin in the most desirable location.

80k salary isn't that much especially for a couple, your basically talking about one earning fifty and the other earning 30, and if they have a substantial deposit this lowers again. Plenty of people have the cash working in IT etc, cashing in shares from company sponsored schemes will give them a healthy enough deposit.

desertcircus

The Spider wrote: »

Nope recovery is based on supply and demand, as it always was, if those prices are being achieved, then thats the new baseline, recovery was always going to begin in the most desirable location.

80k salary isn't that much especially for a couple, your basically talking about one earning fifty and the other earning 30, and if they have a substantial deposit this lowers again. Plenty of people have the cash working in IT etc, cashing in shares from company sponsored schemes will give them a healthy enough deposit.

80k would comfortably place a household in the top 15% in the country. And banks are increasingly wary of lending on the basis of two incomes. And how does a couple on 50k and 30k build up a deposit big enough to make a significant dent in necessary earnings? To bring it down by 25%, you'd need a deposit of about sixty thousand quid more - in other words, a year's pretax salary for a couple aiming for the 240k mark.

PhilMcGee

You can buy a 100k property now for 25k deposit and less than €450 per month payments on the remaining mortgage.
Thats very attractive to investors when you see what rents those properties can achieve.
Probably very attractive to owner occupiers too, but I only see investors jumping in at the moment.
I think most property might still be out of the reach of ordinary families, but there are easy pickings for investors.

Anynama141

The Spider wrote: »

That argument doesn't stand up when it comes to buying a house, you are using the rising cost of utilities and services against the rising cost of an asset someone has invested in? You can use that argument against the rising cost of rent as it's an outgoing cost with no return.

We are told time and time again that housing IS NOT AN ASSET. Housing is a basic requirement for living, unless you want to live in a field or something.

Thus increasing costs of housing, be it for rent or for mortgages are a BAD thing. And the consequences of increasing housing prices on people's economic behaviour - wealth effects etc. - are also A BAD THING. Do you remember the property bubble at all?

The Spider wrote: »

Put it this way if you invest your money in shares do you want to see that price drop? If you have a pension that you invest in do you want to have less than you put in when you cash in, all of this applies to people buying houses.

I don't HAVE to buy shares. I DO have to live somewhere, and pay rent or a mortgage.

I really don't understand how people can be so ignorant of these principles after the decade we've just had when the evidence has been all around them.

Anynama141

The Spider wrote: »

Nope recovery is based on supply and demand, as it always was, if those prices are being achieved, then thats the new baseline, recovery was always going to begin in the most desirable location.

The recovery was when prices crashed from ridiculous levels to the current more realistic, more healthy (but still high) levels.

PhilMcGee

There is a concept of a "healthy market" for everything.
A healthy market does not involve prices going down.

desertcircus

PhilMcGee wrote: »

There is a concept of a "healthy market" for everything.
A healthy market does not involve prices going down.

Cars, PCs, phones?

The Spider

Anynama141 wrote: »

We are told time and time again that housing IS NOT AN ASSET. Housing is a basic requirement for living, unless you want to live in a field or something.

Thus increasing costs of housing, be it for rent or for mortgages are a BAD thing. And the consequences of increasing housing prices on people's economic behaviour - wealth effects etc. - are also A BAD THING. Do you remember the property bubble at all?

I don't HAVE to buy shares. I DO have to live somewhere, and pay rent or a mortgage.

I really don't understand how people can be so ignorant of these principles after the decade we've just had when the evidence has been all around them.

Well that's the most ridiculous thing I've ever read, housing is an asset, historically it's the most basic asset there is, every economy on the planet is based on people owning land, that's what wars are fought over territory!

Now as for somewhere to live, yes you do have to live somewhere, however that doesn't mean you are entitled to a cheap house, you can rent.

Or you can commute into the city centre and buy in a town outside Dublin, as do the vast majority of people working in the likes of London, New York etc. Why does everybody think they're entitled to Nice house in a great area of the city centre, have excellent schools, and want it all for below 200k?

I have news the reason those places are nice is because they're expensive a certain type of person can't live there because they can't afford to, and every professional in the city wants to live in those areas, thus high prices.

PhilMcGee

desertcircus wrote: »

Cars, PCs, phones?

Different beasts altogether. Im sure you know why.
But over time the amount that people spend on these should increase in a healthy market, they might get more for their buck, because of advances in technology. But all of those things are perishable in the short term. Property is not, unless you are talking about Baldoyle

Solair

A healthy market is more about being sustainable in the long term.

Ireland's housing market just had a spectacular crash on a scale that's almost unprecedented. It was a mega-bubble.

There are a few spots of demand in the market but let's not forget that outside of a select few Dublin suburbs we are still seeing falling prices and extremely low volumes of sales.

You'll always get a few expensive areas that don't quite follow the general trend but, I'd be more concerned about the fact that a huge % of the market still hasn't even found the floor.

A healthy market is one where supply and demand roughly meet in the middle. Ireland's housing market is absolutely not like that.
It's more like a market with a severe case of bipolar disorder.

There are also huge risk factors:

*Banks' future still far from certain.
*Insufficient normal access to credit
*Poor credit rating for the state & banks.
*Falling incomes due to lower wages and increased taxation.
* very high unemployment
* net emigration
*Potentially loads of reposed properties appearing on the market (there are loads of people in family homes in severe mortgage distress in desirable areas)
Currency uncertainty
*Fundemental economic policies being made up by both Dublin & Brussels on the fly.
*EU fiscal policy being dictated by national election concerns in Germany & the Netherlands etc

I could go on but I would definitely say its a dead cat bounce until some of those issues get fixed.

Anynama141

The Spider wrote: »

Well that's the most ridiculous thing I've ever read, housing is an asset, historically it's the most basic asset there is, every economy on the planet is based on people owning land, that's what wars are fought over territory!

Does any of that make it better if it gets more expensive? No.

The Spider wrote: »

Now as for somewhere to live, yes you do have to live somewhere, however that doesn't mean you are entitled to a cheap house, you can rent.

Where did I say that people are 'entitled' to a cheap house? I think you'll find that I said that you could also rent. Do you think people being forced to pay higher rents is also a good thing?

The Spider wrote: »

Or you can commute into the city centre and buy in a town outside Dublin, as do the vast majority of people working in the likes of London, New York etc. Why does everybody think they're entitled to Nice house in a great area of the city centre, have excellent schools, and want it all for below 200k?

Who exactly are you arguing with here?

What does this have to do whether property get more expensive is a good thing?

The Spider wrote: »

I have news the reason those places are nice is because they're expensive a certain type of person can't live there because they can't afford to, and every professional in the city wants to live in those areas, thus high prices.

Wow, what a marvellous grasp of the property market you have.

Now can you explain why it is a good thing if a fundamental basic human need is getting more expensive?

Anynama141

PhilMcGee wrote: »

Different beasts altogether. Im sure you know why.
But over time the amount that people spend on these should increase in a healthy market, they might get more for their buck, because of advances in technology. But all of those things are perishable in the short term. Property is not, unless you are talking about Baldoyle

Property is also perishable. You have to spend money to maintain your property. If you take a house that hasn't has a penny spent on it in a hundred years, you will have an unliveable wreck. The only thing you are sure won't 'perish' and needs no maintenance - unless it is a leasehold - is the land that house is standing on.

PhilMcGee

Anynama141 wrote: »

Property is also perishable. You have to spend money to maintain your property. If you take a house that hasn't has a penny spent on it in a hundred years, you will have an unliveable wreck. The only thing you are sure won't 'perish' and needs no maintenance - unless it is a leasehold - is the land that house is standing on.

Now its getting ridiculous. OK. If it makes you feel better to think you are right, who am I to argue.
Maybe you will be found to be right in the long term.
Might be a long wait though.

The Spider

Anynama141 wrote: »

Wow, what a marvellous grasp of the property market you have.

Now can you explain why it is a good thing if a fundamental basic human need is getting more expensive?

You're obviously coming at this from the side of someone who rents, I'll come at it from the other side, why is it a good thing that property prices rise? Simple it means I'm not in negative equity and I have an asset that's performing, it means I feel richer even if I'm not and I'm more likely to spend money in the economy rather than hoard it away, it's a psychological thing, basically if I do lose money there's always the house I can sell, it should never come to it, but if people think they are worth more they're happier.

Why is it a good thing that rents rise? Again simple assets that I've invested in are performing and giving me a maximum return for the money I've put in.

If you're going to worry about basic human need and play the social card, fine but that's up to the government to provide that, as a private citizen I am entitled to maximise profit for the use of an asset.

Anynama141

PhilMcGee wrote: »

Now its getting ridiculous. OK. If it makes you feel better to think you are right, who am I to argue.
Maybe you will be found to be right in the long term.
Might be a long wait though.

Wait, what?? You never heard of house maintenance? Painting? New kitchens, bathrooms? Wiring? Maintaining/replacing doors and windows?

Roofing? Internal decor? Structural issues, subsidence? Insulation?

Is the idea of maintaining a property really a new idea to you?

PhilMcGee

Anynama141 wrote: »

Wait, what?? You never heard of house maintenance? Painting? New kitchens, bathrooms? Wiring? Maintaining/replacing doors and windows?

Roofing? Internal decor? Structural issues, subsidence? Insulation?

Is the idea of maintaining a property really a new idea to you?

I cant argue with the wife either. So I just let her be right all the time.
Sometimes life is just easier that way.
You are right. Go for it.

Anynama141

The Spider wrote: »

You're obviously coming at this from the side of someone who rents, I'll come at it from the other side, why is it a good thing that property prices rise? Simple it means I'm not in negative equity and I have an asset that's performing, it means I feel richer even if I'm not and I'm more likely to spend money in the economy rather than hoard it away, it's a psychological thing, basically if I do lose money there's always the house I can sell, it should never come to it, but if people think they are worth more they're happier.

A house is 'performing' if it keeps you warm and dry. So basically you are saying that rising property prices create an ILLUSION of wealth and encourage people to spend more extravagantly than they normally would?

You remember the bubble, right? That didn't end well, did it?

The Spider wrote: »

Why is it a good thing that rents rise? Again simple assets that I've invested in are performing and giving me a maximum return for the money I've put in.

So it's good for the landlord - is it good for the renter? Is it good for the economy? Is it good for society?

NO, NO and NO.

The Spider wrote: »

If you're going to worry about basic human need and play the social card, fine but that's up to the government to provide that, as a private citizen I am entitled to maximise profit for the use of an asset.

Sure you can, maximise all you like, I'm all for that. But I wonder how you feel about repossessions of those properties in mortgage arrears?

And I still don't understand why you think basic needs getting more expensive for everybody is good for a society and an economy.

Anynama141

PhilMcGee wrote: »

I cant argue with the wife either. So I just let her be right all the time.
Sometimes life is just easier that way.
You are right. Go for it.

Not the most gracious acknowledgement ever, but I'll accept it. If you have no counterargument, you can just say that. We all get things wrong from time to time.

desertcircus

The reason rising housing coats are a bad idea is that it ties up investment and spending in an incredibly unproductive enterprise. Every extra euro spent on housing is a euro less spent on something else; something that provides employment, or advances technology, or reduces costs elsewhere. Assuming a given supply of housing, it's economic bad news for the price of that housing to be much beyond the cost of providing and maintaining it.

PhilMcGee

Anynama141 wrote: »

Not the most gracious acknowledgement ever, but I'll accept it. If you have no counterargument, you can just say that. We all get things wrong from time to time.

Thats what she always says too.

Galego

Consequences of a housing bubble. No disposable income left in the economy to spend! :-(

Results summary, Q3 2012

Household net worth increased by €11bn or 2.5 per cent during Q3 2012, reaching €456.9bn or €99,646 per capita. This marked the first rise in household net worth since Q1 2008

Household debt to disposable income, an indicator of debt sustainability, declined further during Q3 2012, to stand at 203.8 per cent

Source: http://www.centralbank.ie/

RATM

I remember reading before that one prominent feature of property crashes worldwide is a dead cat bounce, economists have analysed lots of crashes over the last 100 years and come to to the conclusion that it is almost unheard of for it not to occur when a property market is in decline.

Of course Ireland is different :rolleyes:

Economists have also found strong correlations between unemployment and property prices during a crash. In short property markets can't recover until unemployment goes down. The reason is that it it all due to consumer sentiment. Ireland has an effective unemployment rate of 23% and when you have that then then sentiment shoots downwards because for every person who is unemployed you have another person who is still working but is in constant fear of losing their job. People don't like uncertainty and markets hate it even more. When uncertainty exists then people put their wallets away and prices will continue to fall.

In my mind two major events need to happen before there is a true market recovery. One is for unemplyment to sink below 10%. But that alone won't do it, the other event that needs to happen is for a major foreign bank to come in and start lending mortgages in a big way. Our so called pillar banks do not have the funds to fill this void.

Last October Tesco Banking offered UK customers mortgages at 2% interest rates provided that they have a 40% deposit.
http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/9619675/Tesco-launches-1.99pc-mortgage-deal.html

There is a five year backlog of Irish first time buyers (myself included) who have deposits in the region of 40% but are still sitting on the fence waiting. As a very cash rich company Tesco could easily come in here with a similar deal and sell mortgages to tens of thousands of people. They have a ready made network of supermarkets in Ireland and they already have the necessary IT systems in place in the UK.

But back in August Tesco looked at the Irish mortgage market and decided not to enter it, despite the already present infrastructure in every major town in Ireland. If a company like Tesco turned their nose up at the Irish mortgage market then we really are fooked more than I'd thought.
http://www.independent.ie/business/personal-finance/property-mortgages/tesco-wont-offer-irish-mortgage-service-26888898.html