PROPERTY CRASH (2016)

bren2002

enfant terrible wrote: »

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?

Or more

Pawwed Rig

enfant terrible wrote: »

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?

Well Yes but Trackers and variable rates have nothing to do with each other.
A tracker 'tracks' the ECB rate. Lets say In have a 1% tracker. When the ECB rate moves my tracker will move always maintaining the 1% margin for the bank.
A variable rate is whatever the bank says it is. Technically a bank can set their variable rate at whatever they like.

What your post should say is

enfant terrible wrote: »

So if the ECB rises interest rates 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?

enfant terrible

Pawwed Rig wrote: »

Well Yes but Trackers and variable rates have nothing to do with each other.
A tracker 'tracks' the ECB rate. Lets say In have a 1% tracker. When the ECB rate moves my tracker will move always maintaining the 1% margin for the bank.
A variable rate is whatever the bank says it is. Technically a bank can set their variable rate at whatever they like.

What your post should say is

And your answer would be?

Pawwed Rig

enfant terrible wrote: »

And your answer would be?

You have been answered three times now. I am not sure how else to explain it to you

enfant terrible

Pawwed Rig wrote: »

You have been answered three times now. I am not sure how else to explain it to you

Do you think its likely the banks will raise variable rates even with the pressure Noonan is putting on them to reduce variable rates?

talking_walnut

enfant terrible wrote: »

Do you think its likely the banks will raise variable rates even with the pressure Noonan is putting on them to reduce variable rates?

Yes they probably will. Their costs will increase so they are likely to pass that increase on to the consumer.

[The ideas expressed in this post are based on personal opinion only. This is not a guarantee....]

Grecco

Don`t know whats going to bring about a property crash in 2016 now. I have noticed that its becoming harder to buy the 3 bed properties. I was at the last Allsop auction and noticed that some of the properties sold at auction went more than similar properties for sale privately.
Definitely more of a buzz about property now, looks like we are on the up part of the cycle now.
I expect most of the decent housing stock floating about to be gone by the end of 2016. I`m still a buyer now (for the next 12 months anyway) but with caution. Junk houses/properties are junk for a reason!

joe_six_cans

a crash could happen if there is a major global event , other than that , there is zero chance of a crash next year , we are not long enough into the current cycle

as for interest rates rising , even there is a major global event , they are not going to rise , yellen chickened out of raising rates on thursday which strengthened the euro , a currency war looks like what is happening right now , draghi will weaken the euro further as there is no inflation at all in europe

For ever odd

Have a look into the 8.6 year Real estate cycle (4.3 up 4.3 down) which is part of a bigger cycle. The end of this quater is predicted to be in or around the peak.

joe_six_cans

For ever odd wrote: »

Have a look into the 8.6 year Real estate cycle (4.3 up 4.3 down) which is part of a bigger cycle. The end of this quater is predicted to be in or around the peak.

the start of this cycle only began in the spring of 2012 in dublin ( and thats wealthy parts of dublin ) and outside dublin a year later

cycles usually last a lot longer than four years , more like seven , plus we had a severe overshoot to the bottom , most bear markets in property dont last five years like ours did

granted most bull markets dont last around eleven years either like ours did from 1995 to 2006 but we went from poorer than the average EU country at that time to considerably richer

nuac

For ever odd wrote: »

Have a look into the 8.6 year Real estate cycle (4.3 up 4.3 down) which is part of a bigger cycle. The end of this quater is predicted to be in or around the peak.

Is there such a cycle?.

Have been reading title deeds for 50+ years. That includes deeds showing sale prices back for 100+ years. There were periods when prices stayed static, but overall there seems to have been an upward trend.

Remember only a certain percentage of properties change hands each decade. Some properties stay in families for generations

For ever odd

nuac wrote: »

Is there such a cycle?.

Have been reading title deeds for 50+ years. That includes deeds showing sale prices back for 100+ years. There were periods when prices stayed static, but overall there seems to have been an upward trend.

Remember only a certain percentage of properties change hands each decade. Some properties stay in families for generations

The uptrend you speak of over the last 50-100 years, was a super cycle that peaked in 2007.

I suppose to look at it objectively, One would have to compare property prices to wage ratio and inflation over the last 50-100 years, and what it will be over the course of the next 25 years.

robp

nuac wrote: »

Is there such a cycle?.

Have been reading title deeds for 50+ years. That includes deeds showing sale prices back for 100+ years. There were periods when prices stayed static, but overall there seems to have been an upward trend.

Remember only a certain percentage of properties change hands each decade. Some properties stay in families for generations

I think all assets generally rise in price despite being part of cycles.

I'd be extremely wary of talking about the average cycle length. It varies so much.

Some interesting work on the trends.

We have been documenting the rise and fall of Dublin house prices from 1708, when deed registration began, to the present day. A pattern is emerging. Even in the 1700s large price swings were recorded. So boom and bust Irish-style is a 300-year-old habit.

http://www.irishtimes.com/news/consumer/bubble-trouble-dublin-s-300-year-old-problem-1.1883981

daheff

joe_six_cans wrote: »

cycles usually last a lot longer than four years , more like seven , plus we had a severe overshoot to the bottom ,

But thats the thing about the market...it can shoot downwards over 4-5 years...but it could rebound to the pre bust average price in a much shorter time...so the theory of 4.3 years down and 4.3 years back up doesnt necessarily make a huge amount of sense (I dont have any actual data to back up this...but in theory its not something that linked)

What effect will a doubling of interest rates have on the Irish housing market? In my view this would be enough to crash the market.

Interest rates can only go up and are so low now that a doubling or even a trebling of rates is entirely possible in the coming years. Such levels would be nothing exceptional from a historical perspective.

seamus

Interest rates in Ireland are high in comparison to the rest of Europe, so an increase in ECB rates likely wouldn't be as quickly reflected here. ECB rates are at an historic low, but Irish rates aren't.

With typical rates @ ~4%, a trebling is completely not possible as the same conditions don't exist now as they did in the 80s.

At the moment any kind of increase in rates would really only serve to cool it off. We still have a massive housing shortage, so the demand will remain but the amounts available to borrow will reduce, which will require house prices to ease off.

But as employment continues to grow, the amount of people who can afford to buy increases, which puts upward pressure on prices.

lucky john

Deleted User wrote: »

What effect will a doubling of interest rates have on the Irish housing market? In my view this would be enough to crash the market.

Interest rates can only go up and are so low now that a doubling or even a trebling of rates is entirely possible in the coming years. Such levels would be nothing exceptional from a historical perspective.

What do you mean by "coming years"? 2...5..10..20 because as it stands at the minute interest rates wont change by more than .5% for the next 5 years and even after 10years will not be much higher. As it is you can take out a 10 year fixed rate mortgage today if rates are a worry. I think interest rates will not be that big of an issue for the next 20 years as regards their effect on property prices.

lucky john

lucky john wrote: »

as it stands at the minute interest rates wont change by more than .5% for the next 5 years .

Brave man.

euroboom13

Every 1% rise in rates adds 10% onto your monthly payments (approx )

So every 1% rise in rates effects the affordability of purchasers by 10%

Rates will effect property prices!
Rates need to rise!

Our property market hinges on mortgaged purchases, and anything that makes repayments more expensive WILL seriously effect prices.

(20 years cheap credit is delusional, and normalised rates(ecb 3%) will crash prices very quickly )

lucky john

euroboom13 wrote: »

Every 1% rise in rates adds 10% onto your monthly payments (approx )

So every 1% rise in rates effects the affordability of purchasers by 10%

Rates will effect property prices!
Rates need to rise!

Our property market hinges on mortgaged purchases, and anything that makes repayments more expensive WILL seriously effect prices.

(20 years cheap credit is delusional, and normalised rates(ecb 3%) will crash prices very quickly )

Why do you think 3% is the normalised ECB rate? since 2000 the Ecb rate has been 3% or more for only 4 years and 2% or less for 10 of the last 15 years. It may be an aspirational rate but that means nothing really. Europe has reached a state where there is no internal driver of growth. It now looks like China, much courted as an outlet for European goods may not be the saviour after all. So where will the growth come from that will drive inflation that will drive rates to 3%?

euroboom13

lucky john wrote: »

Why do you think 3% is the normalised ECB rate? since 2000 the Ecb rate has been 3% or more for only 4 years and 2% or less for 10 of the last 15 years. It may be an aspirational rate but that means nothing really. Europe has reached a state where there is no internal driver of growth. It now looks like China, much courted as an outlet for European goods may not be the saviour after all. So where will the growth come from that will drive inflation that will drive rates to 3%?

Investors pile into an economy with a chance of inflation, so all it can take is a small rate rise, to kick start inflation.(and it{inflation} wont start without this influx of new private money)

Private money fears zero/neg inflation.

euroboom13

Unless 3% inflation is achieved ,government debt increases with time! goverments want high inflation to reduce the national debt!

Grecco

No interest rate rises for the next 2 years min.
Rents rising
Its all gravy from here, keep buying, plenty of money in this country, property will continue to rise for the foreseeable future. Interest rates were never so low, they cant even get a 0.25% rate rise stateside and they've been printing money 18 months before Euroland started up the presses.

lucky john

http://www.independent.ie/business/world/how-swedens-negative-interest-rates-experiment-has-turned-economics-on-its-head-31563851.html

I thought this might make interesting reading in discussion on Interest rares and when they might rise soon.

Waltan

With western interest rates around 0% making the equity markets and property markets artificially high the governments are stuck between a rock and a hard place. If they raise rates there is sure to be an equity market crash. If they leave them at 0% there is sure to be a bigger bubble. With the levels of sovereign debt this is gonna end badly one way or the other.

trobbin

So the FED raised rates in December and will look at again in two weeks, but more raises are almost guaranteed. I don't think ECB will follow straight away, but BOE will follow suit once FED continue, then ECB.

So with Germany needing rates increasing to stabilise a booming economy, there'll be pressure from them soon.

I strongly believe extremely low interest rates will begin to rise. Countries like Germany, France and UK will lead the way in EU. There's also growing pressure from investors for higher returns.

Noonan will sell AIB and Permo this year or next. Once they're back in private ownership, Banks will increase rates without concern for anything but profit. BOI has already tried to buy governments 14% stake, as they feel it's hindering the bank moving forward.

It was a brave prediction from the OP, but in theory he's correct in a logical world. I'm not sure Irish property is logical. So even though many factors presented against house prices they've started to stabilise, at least for now.

How does the OP feel, now we're well into 2016?

Roonbox

trobbin wrote: »

So the FED raised rates in December and will look at again in two weeks, but more raises are almost guaranteed. I don't think ECB will follow straight away, but BOE will follow suit once FED continue, then ECB.

So with Germany needing rates increasing to stabilise a booming economy, there'll be pressure from them soon.

I strongly believe extremely low interest rates will begin to rise. Countries like Germany, France and UK will lead the way in EU. There's also growing pressure from investors for higher returns.

Noonan will sell AIB and Permo this year or next. Once they're back in private ownership, Banks will increase rates without concern for anything but profit. BOI has already tried to buy governments 14% stake, as they feel it's hindering the bank moving forward.

It was a brave prediction from the OP, but in theory he's correct in a logical world. I'm not sure Irish property is logical. So even though many factors presented against house prices they've started to stabilise, at least for now.

How does the OP feel, now we're well into 2016?

I give the Fed one more raise, two at the very most.
I bet they are reducing within 12 months of that.
I also bet the ECB will not raise rates.

trobbin

Roonbox wrote: »

I give the Fed one more raise, two at the very most.
I bet they are reducing within 12 months of that.
I also bet the ECB will not raise rates.

http://www.rte.ie/news/business/2016/0601/792666-fed-beige-book/

I reckon you'll see their second raise in two weeks.

Can't see FED going up and down, actually never heard of that. They've always been upwards or downwards. They're under extreme pressure to increase rates, and the will is there.

But we've all got our opinions😀

Wanderer78

im deeply concerned that the ecb may start raising soon. it ll be a body blow if they do

Roonbox

trobbin wrote: »

Roonbox wrote: »

I give the Fed one more raise, two at the very most.
I bet they are reducing within 12 months of that.
I also bet the ECB will not raise rates.

http://www.rte.ie/news/business/2016/0601/792666-fed-beige-book/

I reckon you'll see their second raise in two weeks.

Can't see FED going up and down, actually never heard of that. They've always been upwards or downwards. They're under extreme pressure to increase rates, and the will is there.

But we've all got our opinions

They are under a lot of pressure to raise. I just think they will be forced back down pretty quickly when they do raise.
Either way its going to be interesting...