Boom will be back

Kaloma

Anyone else read the "if were not careful we'll be back on the property hamster wheel" article in the Examiner? Property crises keeps getting worse.

Eldarion

What's this "will be back" malarkey? We're already in the full swings of it, discussions have indicated this has been the case since early this year. It's gonna get a whole lot messier too unless actions are taking to remedy key factors.

6 years seems to be the general populace's memory span it seems.

TheDriver

only saving grace is that the banks aren't throwing money at people

MouseTail

TheDriver wrote: »

only saving grace is that the banks aren't throwing money at people

That to me is the key difference, and how we will avoid a bubble.

gaius c

MouseTail wrote: »

That to me is the key difference, and how we will avoid a bubble.

This has come up before. There's actually loads of credit out there. There's over 100k loans benefitting from cheaper than market finance as they don't make full repayments. And that's part of the reason Johnny & Mary FTB can't get credit for anything more than a 2 bed in Adamstown.

Eldarion

gaius c wrote: »

This has come up before. There's actually loads of credit out there. There's over 100k loans benefitting from cheaper than market finance as they don't make full repayments. And that's part of the reason Johnny & Mary FTB can't get credit for anything more than a 2 bed in Adamstown.

Existing loans can't "reinflate" another bubble though. There needs to be a constant influx of of new capital/credit being introduced into the market to inflate prices beyond their un-speculative values.

I'm not sure you can call it a bubble if the "bubble" is being inflated by restrictions on supply rather than influx of money.

crackcrack30

Eldarion wrote: »

Existing loans can't "reinflate" another bubble though. .

Shouldn't they be put on the market for families , FTB's or investors who can make repayments thus releasing the bottleneck of supply........I'm not convinced that we need to start building on every cabbage patch again to feed another frenzy...

I'm also not convinced that everyone that lives in a city should be able to afford a 3 bed semi-d, within 20minutes of the city centre.

Eldarion

crackcrack30 wrote: »

Shouldn't they be put on the market for families , FTB's or investors who can make repayments thus releasing the bottleneck of supply........I'm not convinced that we need to start building on every cabbage patch again to feed another frenzy...

I'm also not convinced that everyone that lives in a city should be able to afford a 3 bed semi-d, within 20minutes of the city centre.

I don't disagree with anything here. Restricted supply still doesn't make it a bubble though.

There are other factors restricting supply rather than just the "strategically living for free" crowd. NAMA, no credit to the construction sector, no incentive for "empty-nesters" to sell, poor city/zonal planning to name a few.

gaius c

Eldarion wrote: »

Existing loans can't "reinflate" another bubble though. There needs to be a constant influx of of new capital/credit being introduced into the market to inflate prices beyond their un-speculative values.

I'm not sure you can call it a bubble if the "bubble" is being inflated by restrictions on supply rather than influx of money.

Not so sure about that. If everybody else having restricted credit means they have to break the piggy bank best kept for rainy days in order to provide shelter for their families, I think that's a problem. Debating whether to call it a bubble or not is kind of missing the point that capital is being misallocated on a very large scale.

We're in uncharted territory here. Let the historians decide if it's a bubble or not. Anybody bar banks will know rises at the levels we've seen lately are not good news.

Eldarion

gaius c wrote: »

Not so sure about that. If everybody else having restricted credit means they have to break the piggy bank best kept for rainy days in order to provide shelter for their families, I think that's a problem. Debating whether to call it a bubble or not is kind of missing the point that capital is being misallocated on a very large scale.

We're in uncharted territory here. Let the historians decide if it's a bubble or not. Anybody bar banks will know rises at the levels we've seen lately are not good news.

Famous words often quoted "This time it's different!".

The source of capital is paramount in this instance. This isn't Mary & Joe on <€30k getting mortgage approval for a €500k house times. This is people utilising savings and large deposits and/or passing stringent bank stress tests entering the market.

You might argue that they are overpaying for their asset but that is their prerogative. I don't believe we'll end up the same as last time on a country scale but I do believe some people will get burnt if/when the factors restricting supply are addressed.

I don't believe there will be a 'bubble pop' this time, more of surge and ebb.

gaius c

Eldarion wrote: »

Famous words often quoted "This time it's different!".

The source of capital is paramount in this instance. This isn't Mary & Joe on <€30k getting mortgage approval for a €500k house times. This is people utilising savings and large deposits and/or passing stringent bank stress tests entering the market.

You might argue that they are overpaying for their asset but that is their prerogative. I don't believe we'll end up the same as last time on a country scale but I do believe some people will get burnt if/when the factors restricting supply are addressed.

I don't believe there will be a 'bubble pop' this time, more of surge and ebb.

I think it's a problem when folk are blowing their future inheritance in order to buy a house (and acquire debt) when previously inheritances were used to pay down debt.

Talking of buzzwords, "surge" has got to be the most overused one from the rally monkeys.

CatFromHue

Good article by Ronan Lyons in the current situation

http://www.independent.ie/business/personal-finance/property-mortgages/dublin-house-price-rises-are-not-a-bubble-but-are-cause-for-concern-30478112.html

bidiots

Eldarion wrote: »

Famous words often quoted "This time it's different!".

The source of capital is paramount in this instance. This isn't Mary & Joe on <€30k getting mortgage approval for a €500k house times. This is people utilising savings and large deposits and/or passing stringent bank stress tests entering the market.

You might argue that they are overpaying for their asset but that is their prerogative. I don't believe we'll end up the same as last time on a country scale but I do believe some people will get burnt if/when the factors restricting supply are addressed.

I don't believe there will be a 'bubble pop' this time, more of surge and ebb.

That 500k house may now be 300k....but 300k costs a lot more to service without a tracker!

jay0109

Mortgage drawdowns are on the rise. I expect to see a major increase on them from the New Year onwards.
You see, the prices have gone so high that the cash buyers alone cannot keep the surge going, especially with more supply on the way in about 2 years. So the masses will be given credit...just at the time that house prices have gone too high for the canny investors who got in early.
So it's a case of 'send in the cannon fodder/suckers' to prolong the 'war'

asingrang

My own view is that this is just the first part of an economic cycle upswing. It will reverse again in another 6 or 7 years.

As always happens when any market turns, it is sudden, and that is what has just happened, and people are in shock ... again. The very same thing happened when the economy and house prices took a sudden downward trajectory last time. And when it heads south next time it will be sudden too.

So whats next? Demands for more building of houses and then apartments, then we will overshoot and become severely over supplied again as too many houses and apartments are built and off we go on slide back down.

L1011

TheDriver wrote: »

only saving grace is that the banks aren't throwing money at people

Yet!

MouseTail

MYOB wrote: »

Yet!

If it gets to that stage, wide availability of cheap credit, combined with severe supply issues, we are in trouble! I really cant see another competitor entering the market though, and that's what would be needed, ala BoS last time.

L1011

MouseTail wrote: »

If it gets to that stage, wide availability of cheap credit, combined with severe supply issues, we are in trouble! I really cant see another competitor entering the market though, and that's what would be needed, ala BoS last time.

The purchaser of ICS has made noises about issuing new mortgages. Whether anything comes of that is another story.

riclad

THE boom is restricted to certain parts of dublin,
Most parts of the country ,prices are not rising .I heard a program on the radio,
it said people are buying houses ,as in investment ,
to rent out, and in the hope of rising value .
Present return is about 5 per cent .
And the interest rates are low if you have say 100k in a bank account.
Not a great return considering the time needed for management ,repairs,
paying taxes,etc
People may have short memorys,
but i think it,ll be along time before we ,ll see banks lending people 250k,
to buy a semi d house in cavan,or kerry.
The last boom was caused by reckless, crazy lending by the banks.
And it effected the whole country.

bidiots

But now people are allowed live in houses without paying their mortgage due to lack of repossession. Banks are still screwing the country.

gaius c

jay0109 wrote: »

Mortgage drawdowns are on the rise. I expect to see a major increase on them from the New Year onwards.
You see, the prices have gone so high that the cash buyers alone cannot keep the surge going, especially with more supply on the way in about 2 years. So the masses will be given credit...just at the time that house prices have gone too high for the canny investors who got in early.
So it's a case of 'send in the cannon fodder/suckers' to prolong the 'war'

Yep, the suckers have arrived and they are armed with credit now.

ABajaninCork

Went to view a house in Co. Cork this morning with a friend who's a FTB.

The BS the Estate Agent was coming out with, was amazing! Fortunately, my friend didn't fall for it but 2006 called - They want the EA back!!

riclad

bidiots wrote: »

But now people are allowed live in houses without paying their mortgage due to lack of repossession. Banks are still screwing the country.

NO ,its not so simple,
some people are paying what they afford , as best they can.
Some people are getting help off welfare to pay their loan.
IF you stop paying anything on your mortgage after a certain time the bank will go for a
court order to evict you.
I,m not an expert , if some one is paying ,say half their mortgage on a house worth 100k,
loan is 170k,
What benefit is there in a bank evicting them.
IF the bank evicts them , the will likely stop paying the loan.
Most people s income has gone down since 2006, and taxes have gone up.
The amount of people paying zero on a mortgage is small.

TheDriver

ABajaninCork wrote: »

Went to view a house in Co. Cork this morning with a friend who's a FTB.

The BS the Estate Agent was coming out with, was amazing! Fortunately, my friend didn't fall for it but 2006 called - They want the EA back!!

can i ask whereabouts and what they said?. If i hear an EA say to me that i need to buy as prices are rising one more time, i will scream. Most don't gave a clue, telling you how bad timber frame is until i pointed out the house he was showing was timber frame!

jay0109

riclad wrote: »

NO ,its not so simple,
some people are paying what they afford , as best they can.
Some people are getting help off welfare to pay their loan.
IF you stop paying anything on your mortgage after a certain time the bank will go for a
court order to evict you.
I,m not an expert , if some one is paying ,say half their mortgage on a house worth 100k,
loan is 170k,
What benefit is there in a bank evicting them.
IF the bank evicts them , the will likely stop paying the loan.
Most people s income has gone down since 2006, and taxes have gone up.
The amount of people paying zero on a mortgage is small.

If you can't afford the mortgage, the house should be sold and someone who can afford it at current prices will take it on.
Simple economics

ABajaninCork

TheDriver wrote: »

can i ask whereabouts and what they said?. If i hear an EA say to me that i need to buy as prices are rising one more time, i will scream. Most don't gave a clue, telling you how bad timber frame is until i pointed out the house he was showing was timber frame!

It was in Midleton...

TheDriver

Ah jaysus, if u said Douglas there might be some truth but prices in midleton, mallow, cobh, Fermoy, Bandon have at best stabilised.....no boom at all

ABajaninCork

TheDriver wrote: »

Ah jaysus, if u said Douglas there might be some truth but prices in midleton, mallow, cobh, Fermoy, Bandon have at best stabilised.....no boom at all

YOU know that. I know that. My friend knows that. Apparently, that small fact has passed the EA by...

The man was very nice, but a complete idiot IMO.

yllw.ldbttr

I'm buying a house outside Cork city, and selling in the same area and I'd disagree with the above. Offers on our house are gone above asking.