PROPERTY CRASH (2016)

euroboom13

I believe we are heading for another fall in house prices.

Reasons

1)entry level wages are appalling
2)young people can't save deposited
3)repayments aren't affordable (to Ave man)on 300k properties
4)repayments can't come down much but can very likely go up(as ecb rates move)
5)Tax office are chasing purchasers whom lease there homes to cover mortgage, undeclared rental income and and fraudulent mortgage relief.
6)Property tax
7)expendable income reduced... social charge/water rates/ increased bills.

In fact i can see nothing positive for the next 5yrs (only talk of 2% wage increases)

Don't mean to scare people ( well maybe just a small bit to the bullish property bidders) but this is not going to be a property driven recover (unless Ave wages double)

GLa

2008 bank crisis /2016 property crash

euroboom13

http://www.independent.ie/business/sodens-pad-reduced-by-another-150000-31171715.html

galljga1

euroboom13 wrote: »

http://www.independent.ie/business/sodens-pad-reduced-by-another-150000-31171715.html

So, sell 2015, buy back 2019. We're all millionaires again.

Pawwed Rig

It is a strange time as many with mortgage approval try to jump onto the ladder before it expires and they are subject to CB regs. I think many of the asking prices were stupidly optimistic though so reductions in asking prices is not entirely unexpected.

For ever odd

2016 property crash = banking crisis

lucky john

I'm not so sure 2016 will be the year of the crash

Reasons...
1.. the government are trying to sell of AIB and PSTB.
2. We are in the run up to an election so Enda won't want to see "property crash" or "new negative equity crisis" in the headlines.
3. Rents v mortgage repayments are much of a muchness in many areas.
4. Wages may not be climbing but employment sure is.
5. Serious pent up demand in dublin. This demand is coming to the realization that yet again a house in the capital is but a dream. Prices in the commuter counties are rising and will put a floor under national prices. There is more to property prices than just Dublin.
6. NO houses worth a dam are been built in many parts of the main population areas. 2016 will not improve this imbalance.
7. QE will most likely allow banks to reduce interest rates, especially to first time buyers, without impacting on their bottom line.
8. Competition for borrowers will give drive banks offer incentives, again to first time borrowers and trader uppers. QE will again support margins.
9. The start of the year is traditionally week for home sales. Lets see where we are by mid year.
10. In many of the counties (midlands mostly) worst affected by the bust, prices have been unnaturally low. This has been compounded by big lot sales at knock down prices. These properties are now finding buyers as they are still cheap by past standard, and there are plenty of them. Places like Longford, cavan, roscommon, Laois, offaly ect could easily be the best performing markets by year end and as with the commuter counties, keep a floor under national prices.

Just my thoughts. Don't underestimate the irish obsession with property ownership.

arrowloopboy

lucky john wrote: »

I'm not so sure 2016 will be the year of the crash

Reasons...
1.. the government are trying to sell of AIB and PSTB.
2. We are in the run up to an election so Enda won't want to see "property crash" or "new negative equity crisis" in the headlines.
3. Rents v mortgage repayments are much of a muchness in many areas.
4. Wages may not be climbing but employment sure is.
5. Serious pent up demand in dublin. This demand is coming to the realization that yet again a house in the capital is but a dream. Prices in the commuter counties are rising and will put a floor under national prices. There is more to property prices than just Dublin.
6. NO houses worth a dam are been built in many parts of the main population areas. 2016 will not improve this imbalance.
7. QE will most likely allow banks to reduce interest rates, especially to first time buyers, without impacting on their bottom line.
8. Competition for borrowers will give drive banks offer incentives, again to first time borrowers and trader uppers. QE will again support margins.
9. The start of the year is traditionally week for home sales. Lets see where we are by mid year.
10. In many of the counties (midlands mostly) worst affected by the bust, prices have been unnaturally low. This has been compounded by big lot sales at knock down prices. These properties are now finding buyers as they are still cheap by past standard, and there are plenty of them. Places like Longford, cavan, roscommon, Laois, offaly ect could easily be the best performing markets by year end and as with the commuter counties, keep a floor under national prices.

Just my thoughts. Don't underestimate the irish obsession with property ownership.

Or share ownership and paying CGT .

facing_west

euroboom13 wrote: »

I believe we are heading for another fall in house prices.

Reasons

1)entry level wages are appalling
2)young people can't save deposited
3)repayments aren't affordable (to Ave man)on 300k properties
4)repayments can't come down much but can very likely go up(as ecb rates move)
5)Tax office are chasing purchasers whom lease there homes to cover mortgage, undeclared rental income and and fraudulent mortgage relief.
6)Property tax
7)expendable income reduced... social charge/water rates/ increased bills.

In fact i can see nothing positive for the next 5yrs (only talk of 2% wage increases)

Don't mean to scare people ( well maybe just a small bit to the bullish property bidders) but this is not going to be a property driven recover (unless Ave wages double)

GLa

2008 bank crisis /2016 property crash

ECB rates are going nowhere in the next two years at least and interest rates in ireland are going to drop , they are above rates in other eurozone nations


if property does crash next year , so will equities which are overvalued relative to property at this particular time

euroboom13

facing_west wrote: »

ECB rates are going nowhere in the next two years at least and interest rates in ireland are going to drop , they are above rates in other eurozone nations


if property does crash next year , so will equities which are overvalued relative to property at this particular time

I couldn`t agree with you less.

In my opinion .

Fed first and ECB next, within 1yr most lightly, but maybe 2yrs.

Equities are broad based and some will fall with property, but surprisingly the banks turnover ,will increase and so will profits.

Irish bank rates will drop but only as ecb rates rise, which will mean ,zero saving ,for mortgage holders.

What makes you think the ECB rate is going nowhere for the next 2yr +?

Is everyone of the opinion that the banks are going to keep maintaining their loan , for very little return? not likely
GLA

(You probable will read in every paper that rates are going nowhere, but that's
Not how things work)

lucky john

"In my opinion .

Fed first and ECB next, within 1yr most lightly, but maybe 2yrs"

I would be less sure of a fed rate increase this year. the economy there is sluggish and no real sign of inflation yet. i know that inflation is been held back by oil but surprisingly the cheap oil does not seem to be stirring much growth. The fed will be disappointed and a little afraid the economy could be stuck a long term rut. with the dollar so strong on top of that, rising rates is risky.

as for the ECB. no chance for the next year and probably 18 months. if they do then QE would be seen as having been unnecessary for one. secondly,the 2% inflation target is still a long way off.

euroboom13

Interesting post ,for quotes, for 18mths to 2 years time! good debate thou

Someone will be wrong!(me even)

lucky john

i'm no expert, just watching with interest.

the world needs more middle class consumers to prop up the economies of the main world goods producers. either that or lower the debt burden of the developed world. only 2 ways to do that really. Write it off, but banks will be having none of that, or inflate it away. creating the inflation has become more difficult than originally expected though. who would have thought that printing and throwing billions and billions of dollars, yen, pounds, yuan and now euro into the system would produce almost no inflationary results. So I think yellen may have jumped the gun hinting at imminent rate rises. I bet she's pissed that europe took so long to get with the program. its the fact that we are out of step that has caused the dollar to spike. i think she will have to wait for europe to catch up before she can act. as you say, time will tell.

euroboom13

My take,

Raising rates creates inflation too, by drawing in deposite`s which in turn are lent out. its also a sign for investors that inflation is moving which in turn creates more investment.

Low rates= deflation /high rates= inflation

Yet we are led to believe the opposite!

When you read about it ,high rates are said to be a tool to reign in inflation and low rate are used to create inflation! But in reality the opposite is true.

If you do QE in a low rate environment the money gets invested outside the country, if you do it when rates are high the money stays at home.

China has had high rates /high inflation. we have low rates and low inflation.

Chicken or the egg, which first!

euroboom13

benny_mountain wrote: »

predicting a rate rise from the ECB is the definition of a contrarian call , their is no clear logic behind it based on recent events and policy statement from frankfurt

I am contrary at the best of times.

We will see, but your right not much talk of it.

euroboom13

benny_mountain wrote: »

most cycles last at least seven years , we are barely half way through this current property cycle as the bottom was only reached in dublin in early 2012 , the media was a year behind the story but south county dublin hit the bottom late 2011 , galway hit the bottom the middle of 2012 and the rest of the country around eighteen months ago

Dose interest rates follow cycles too, and if so would it be counter intuitive to think they might rise?

Property cycles do follow 7 year cycles, they normally double ,but property 4x 1996 to 2006, so what's happening now, is only starting to fix cycle .

Time will tell!

zpehtsfd

euroboom13 wrote: »

I believe we are heading for another fall in house prices.

Haven't you been calling for lower home prices for the last 2 years?

euroboom13

zpehtsfd wrote: »

Haven't you been calling for lower home prices for the last 2 years?

Yes, even longer

stevedublin

euroboom13 wrote: »

Yes, even longer

well you've been wrong, house prices have been going up the last two years.

Gman1987

euroboom13 wrote: »

Yes, even longer

Up again last month
http://www.fxcentre.com/news.asp?3268140

euroboom13

Short term I have been wrong but my reasoning still stand.

Sunday indo said a 2% drop and a drop in asking prices.

I put a brave heading on the post because I am sure.

I will be wrong if 1)wages rise 50%
2)interest rate don't rise
3)state stimulate buying

I was wrong up until now because the newspapers pumped the market again, and very few houses on the market,

House under 300k wont fall much but anything over 500k will plummet.

IN MY OPINION,

Grecco

You should have been buying with the last few years, I've done so with several commercial properties, now I`ll hold and wait.
More Millionaires are made out of a recession than a boom

euroboom13

Grecco wrote: »

You should have been buying with the last few years, I've done so with several commercial properties, now I`ll hold and wait.
More Millionaires are made out of a recession than a boom

I am buying too but definitely not Irish bricks and mortar yet!

2013 had a few realistic prices ,and so will 2016/7.

Anyone who both last year will regret the didn't wait!

The CGT incentive was a cost neutral carrot for the greedy.(no real gains will be had for anything bought )

Best of luck thou ,respect to anyone trying to make a go of things!

Dubh Geannain

We have certainly seen the end of the ridiculous rises. My prediction is that prices at the top end will fall back and could do so quite a bit. 10% plus in the next 18 months.

Prices may fall in the 350-600k range to a lesser extent but will fall none the less as second time buyers purchasing power will be limited by the new CB rules.

The cash buyers and investors may have dried up with the ending of the CGT exemption at the end of last year but I feel there is sufficient pent up demand from FTBs to put a floor on prices in the 150-350 k range. This demand will be reinforced by some Second Time buyers who's purchasing power is reduced sufficiently that the will find themselves competing more and more with FTBs for the same scant stock.

Supply is a major issue for prices. That issue will not be addressed in the next 18 months. So I'd guess prices between 150-350k will be quite sticky. I think the maximum they will fall will be 5%.

I wouldn't go so far as to call it a crash. A crises, most certainly. Personally we have been outbid on around 16 houses in the last two years as buyers lost the runs of themselves.

euroboom13

Dubh Geannain wrote: »

We have certainly seen the end of the ridiculous rises. My prediction is that prices at the top end will fall back and could do so quite a bit. 10% plus in the next 18 months.

Prices may fall in the 350-600k range to a lesser extent but will fall none the less as second time buyers purchasing power will be limited by the new CB rules.

The cash buyers and investors may have dried up with the ending of the CGT exemption at the end of last year but I feel there is sufficient pent up demand from FTBs to put a floor on prices in the 150-350 k range. This demand will be reinforced by some Second Time buyers who's purchasing power is reduced sufficiently that the will find themselves competing more and more with FTBs for the same scant stock.

Supply is a major issue for prices. That issue will not be addressed in the next 18 months. So I'd guess prices between 150-350k will be quite sticky. I think the maximum they will fall will be 5%.

I wouldn't go so far as to call it a crash. A crises, most certainly. Personally we have been outbid on around 16 houses in the last two years as buyers lost the runs of themselves.

Good too see someone ,letting the property go rather than robbing themselves on a" closed auction".

I have viewed properties and being told that offers are 30% above asking.
Property should be sold when asking price is reached(seller reaches his goal), or else go to public auction.

As a person whom puts a lot of thought into pros and cons,i am blown way by the shear financial stupidity of buyers.I met a lot of these buyers 2005/6 paying 600k for poor appartments and thought they had died out, not yet I am afraid!

greed and impatience over reason!

The sad part is sensible families are stuck renting till things settle.(but will be rewarded soon)

Grecco

There will be no property crash in 2016, instead you`ll look on in disbelief as prices push up even higher. By the end of 2016 we will start to see prices approach or get near to the record highs seen during the boom.

euroboom13

Grecco wrote: »

There will be no property crash in 2016, instead you`ll look on in disbelief as prices push up even higher. By the end of 2016 we will start to see prices approach or get near to the record highs seen during the boom.

Not likely, but brave prediction which deserves respect!
Where is the increased money coming from? Last years rally sucked a lot in.

If rates start to rise, would that be positive? because decreases look unlikely in some cases and impossible in others.

As for new blood in the market, Ave man another 30 couldn`t by garden mobile home.

euroboom13

http://www.davidmcwilliams.ie/2015/05/05/the-day-of-debt-reckoning-is-nigh

enfant terrible

euroboom13 wrote: »

http://www.davidmcwilliams.ie/2015/05/05/the-day-of-debt-reckoning-is-nigh

If trackers rise, do variable rates rise too or are they separate?

Prezatch

Also, he mentions that over 50% of mortages in 2008 in Ireland were trackers. What percentage are we at now a days does anyone know?

Pawwed Rig

enfant terrible wrote: »

If trackers rise, do variable rates rise too or are they separate?

Variables will only rise on a decision from the banks themselves but one would assume that they will pass on any rises to the customer. With a tracker the bank does not have a choice. They are 2 separate products.

enfant terrible

Pawwed Rig wrote: »

Variables will only rise on a decision from the banks themselves but one would assume that they will pass on any rises to the customer. With a tracker the bank does not have a choice. They are 2 separate products.

So if trackers rise by 0.5% next year, is it likely the banks will use that as an excuse to raise the variable rate by the same amount?