Find me a home..........in a bursting bubble

KwackerJack

Watching Find me a home on RTE.............Just waiting for the big bubble to go bang again!

We really are as thick as 2 planks!!

Some 3 bed house (Kimmage) starting at 300k and rising to over 450k before sale agreed.

I'm waiting till it goes boom AGAIN then I'm buying dirt cheap ðŸ˜

nullzero

Fool proof plan you've got there.

myshirt

There won't be another crash of that nature.

Think about the cigarette industry as an example of how this world works. They got their arses kicked in developed markets, moving from a position of Doctors Smoke Camels to a position where the Doctor tells you cigarettes cause cancer.

What did they do? They learnt their lesson and brought the business model to emerging markets where they are making a bomb, and you can be as sure as f*ck they won't let the same mistakes happen again to ruin their business.

What's going on in Ireland is a deliberate reinflating of prices to get to recovery. Great business wise. Not so great social wise. But make no mistake, we always had the brains here to meet whatever goals we wanted to meet. Fine Gael are competent when it comes to economics. They know the levers available to them and what levers they needed to pull. They just didn't pull them. Conciously.
Nothing necessarily sinister or underhanded, that is just where they lean economically, but the important point is they have a handle on it, they know what they're doing, and property prices are not going to drop in any crash.

Jet Black

Tried the same time at the last crash but unless you have the cash to buy outright and a secure job it wont happen. Banks won't give you a mortgage on a property especially if there is another crash. Also we are severely lacking supply and there has been a 5-8 year build of people waiting to buy a property. Then there are tens of thousands just like you waiting for the crash that will not come to pick up a 'cheap' property.

Mr_Muffin

With the obvious lack of housing in the country can someone explain why developers are not building houses as fast as they can these days? Serious question. Is it due to the lack of funding/finance available?

domrush

Mr_Muffin wrote: »

With the obvious lack of housing in the country can someone explain why developers are not building houses as fast as they can these days? Serious question. Is it due to the lack of funding/finance available?

Number of reasons.

Lot of developers had to declare bankruptcy and so are prohibited from business activities of this nature for a certain period of time.

Cost of building remains at boom levels.

Land prices are prohibitively high.

Banks are looking for much higher returns on lending to developers.

Instead of concessions to first time buyers and other such measures to cope with demand the government should really be encouraging more supply as much as possible. One cost free method of doing this would be to abolish the frankly medieval height restrictions.

That said there is building going on but likely supply won't catch up for at least 2 years.

Atlantic Dawn

Mr_Muffin wrote: »

With the obvious lack of housing in the country can someone explain why developers are not building houses as fast as they can these days? Serious question. Is it due to the lack of funding/finance available?

I can't really understand why they are not building them fast either, I think the main issue is lack of access to finance, the banks want actual business plans and previous experience in the industry. The banks themselves don't have access to money mountains that they had in the past. They are not giving full non guaranteed loans like in the old days for some lad with a few fields in the back arse of nowhere to fully build 300 houses with not a single one sold.

The Bishop Basher

They're back building in every available space round by us..

High viz and hard hats everywhere..

Sambo shops are chockers again every lunctime..

It's like the party never ended..

Poor Uncle Tom

hahahahaha, the average couple trying to buy or build a home has absolutely no say or sway in a boom or bust....

Dum_Dum

Viewed through the prism of the balance sheets of the banks - all the decisions made by the political class and subsequent outcomes make sense.

Samuel T. Cogley

Mr_Muffin wrote: »

With the obvious lack of housing in the country can someone explain why developers are not building houses as fast as they can these days? Serious question. Is it due to the lack of funding/finance available?

Because what the obvious lack of housing is doing to prices.

If you had a gold bar and it was worth €1000 today but you pretty much knew it was going to be worth €2000 in a years time, when would you sell the gold bar?

All the other reasons are also playing in to this but as someone else said - if we wanted to we'd find a solution. The people who 'matter' here don't want to solve it.

Samuel T. Cogley

KwackerJack wrote: »

I'm waiting till it goes boom AGAIN then I'm buying dirt cheap ðŸ˜

No you wont. There will be feck all for sale, what will be on sale will be in rag order and there will be no finance available.

jimgoose

It doesn't surprise me in the slightest that a comfy three-bed semi in a quiet, mature 'burb two miles from the quays in Dublin is commanding big money. It shouldn't surprise anyone. Do you realise that some of the biggest, strongest, multi-billion dollar enterprises in the World are as we speak worrying about the problem of accommodating more people in Dublin? And Cork? And Limerick? Given the current setup, to wit enormous and growing demand, coupled with a uniquely fucked-up supply, expect this to continue for some time yet. There are married men of thirty-five with small children living in their parents' attics because they haven't a whelk's chance in a supernova of renting something civilised outside of Leitrim, never mind buying.

AtomicHorror

KwackerJack wrote: »

Watching Find me a home on RTE.............Just waiting for the big bubble to go bang again!

We really are as thick as 2 planks!!

Some 3 bed house (Kimmage) starting at 300k and rising to over 450k before sale agreed.

I'm waiting till it goes boom AGAIN then I'm buying dirt cheap ðŸ˜

Bubbles are usually characterized by high prices in the absence of scarcity. We have serious scarcity right now, so in what way is this a bubble?

jimgoose

Samuel T. Cogley wrote: »

No you wont. There will be feck all for sale, what will be on sale will be in rag order and there will be no finance available.

The biggest, strongest bear is going to have the most shit on his arse. 'Twas ever thus!

Jawgap

domrush wrote: »

Number of reasons.

Lot of developers had to declare bankruptcy and so are prohibited from business activities of this nature for a certain period of time.

Cost of building remains at boom levels.

Land prices are prohibitively high.

Banks are looking for much higher returns on lending to developers.

Instead of concessions to first time buyers and other such measures to cope with demand the government should really be encouraging more supply as much as possible. One cost free method of doing this would be to abolish the frankly medieval height restrictions.

That said there is building going on but likely supply won't catch up for at least 2 years.

I also think banks or lenders are getting much more proactively involved in the developers' operations......you get a hint of that from the way they are building. Not only are developments smaller, but the phases within developments are smaller, and one phase pretty much has to be sold out before ground is broken on the next.

Prices aside, I'm not sure we're back to where we were as credit to buy houses is still quite difficult to come by, and the issue seems to be more on the supply side.

donegaLroad

myshirt wrote: »

There won't be another crash of that nature.

Think about the cigarette industry as an example of how this world works. They got their arses kicked in developed markets, moving from a position of Doctors Smoke Camels to a position where the Doctor tells you cigarettes cause cancer.

What did they do? They learnt their lesson and brought the business model to emerging markets where they are making a bomb, and you can be as sure as f*ck they won't let the same mistakes happen again to ruin their business.

What's going on in Ireland is a deliberate reinflating of prices to get to recovery. Great business wise. Not so great social wise. But make no mistake, we always had the brains here to meet whatever goals we wanted to meet. Fine Gael are competent when it comes to economics. They know the levers available to them and what levers they needed to pull. They just didn't pull them. Conciously.
Nothing necessarily sinister or underhanded, that is just where they lean economically, but the important point is they have a handle on it, they know what they're doing, and property prices are not going to drop in any crash.

what about Brexit, and the impending serious consequences it will have on the Irish economy?

RoboRat

donegaLroad wrote: »

what about Brexit, and the impending serious consequences it will have on the Irish economy?

Brexit is an unknown, it could really harm us or really help us. Until it happens or closer to the date, we won't really know what the impact is going to be.

I don't think this housing bubble is the same as the last however. Last time many people were buying multiple properties as investments and never had the financial means to support should the market drop.

It's nowhere near as easy to buy multiple properties as you need to stump up 20% up front and you are also stress tested against all properties whilst only being given credit for 50% of the incoming rent and that is very hard to attain.

There is a severe lack of housing and that is pushing the prices up in highly populated areas but you won't get a mortgage unless you are able to pay a deposit and also pass the stress testing unlike last time where you could get a 100% up to 120% mortgage easily.

The Irish economy is also stronger, more diverse and not as dependent on the Construction industry as it was last time... we have more eggs in more baskets and if the government maintain a sensible approach, even if there is an inevitable downturn, we should be in a better position to weather it.

donegaLroad

RoboRat wrote: »

Brexit is an unknown, it could really harm us or really help us. Until it happens or closer to the date, we won't really know what the impact is going to be.

I don't think this housing bubble is the same as the last however. Last time many people were buying multiple properties as investments and never had the financial means to support should the market drop.

It's nowhere near as easy to buy multiple properties as you need to stump up 20% up front and you are also stress tested against all properties whilst only being given credit for 50% of the incoming rent and that is very hard to attain.

There is a severe lack of housing and that is pushing the prices up in highly populated areas but you won't get a mortgage unless you are able to pay a deposit and also pass the stress testing unlike last time where you could get a 100% up to 120% mortgage easily.

The Irish economy is also stronger, more diverse and not as dependent on the Construction industry as it was last time... we have more eggs in more baskets and if the government maintain a sensible approach, even if there is an inevitable downturn, we should be in a better position to weather it.

I know Brexit is a long argument, Im afraid that I have only heard the serious negative consequences that it will have on the Irish economy. Eg. farming exports to drop by 50% which will be a huge hole to plug.

Also, Trump's plans to drop the corporation tax rate in the US to 15% could mean relocation of some US firms back to the US or elsewhere.

With these two threats looming over Ireland, don't you think that it is wrong to try to lull buyers into a false sense of security by suggesting that everything will be fine.

I heard it before back in 2006, and even as late as 2008, where many unfortunate people were hoodwinked by the same rhetoric, and ended up signing away their lives....

only to be told then that it was 'their choice' and 'the bank didn't put a gun to your head to sign the mortgage papers' etc

Also, when it comes to mortgage lending rates, Irish banks are among the highest in Europe. It might only be costing an Irish bank 0.5% - 1% to borrow the money, they are selling it on to the borrowers at 3.5% - 4.5%

domrush

donegaLroad wrote: »

I know Brexit is a long argument, Im afraid that I have only heard the serious negative consequences that it will have on the Irish economy. Eg. farming exports to drop by 50% which will be a huge hole to plug.

Also, Trump's plans to drop the corporation tax rate in the US to 15% could mean relocation of some US firms back to the US or elsewhere.

With these two threats looming over Ireland, don't you think that it is wrong to try to lull buyers into a false sense of security by suggesting that everything will be fine.

I heard it before back in 2006, and even as late as 2008, where many unfortunate people were hoodwinked by the same rhetoric, and ended up signing away their lives....

only to be told then that it was 'their choice' and 'the bank didn't put a gun to your head to sign the mortgage papers' etc

Also, when it comes to mortgage lending rates, Irish banks are among the highest in Europe. It might only be costing an Irish bank 0.5% - 1% to borrow the money, they are selling it on to the borrowers at 3.5% - 4.5%

I don't think anyone is trying to hoodwink buyers into purchasing now. It's just a simple fact that prices are going to continue to rise until supply catches up with demand, which will be several years away. Unless we experience a recession of some kind that forces severe emigration upon us or mass migration to the countryside, prices are going to go up. It's not a case of Trump or Brexit, there just simply not enough houses in any of the major urban centres at the minute. Despite the focus on Dublin prices, rent and house prices in Cork, Limerick and Galway have also rocketed.

I understand how people are wary about another housing boom but its simply the reality that we're dealing with the effects of a complete privatization of the industry. Before council rates were abolished in 1978 roughly 30-35% of all new supply of housing was government backed. This meant even in times of recession we were still building houses. Since then its become an extremely pro-cyclical industry. We're simply paying the price of not building for almost a decade.

Also the talk of developers sitting on houses waiting for prices to rise is outlandish IMO. There may be a few private sellers doing this but any developer would be eager to build more in the current climate, not sit on existing properties. It's not like there's recently completed housing estates in Dublin city sitting empty.

Samuel T. Cogley

jimgoose wrote: »

The biggest, strongest bear is going to have the most shit on his arse. 'Twas ever thus!

The last crash we had was pretty bad - I think most would agree there. I was in the happy position of being able to buy during it. It took until the upswing for me to get something, albeit at the start of it.

Exactly who are all these people selling during a trough in the market? We don't repossess so it's not forced sales. Rental demand will likely still be there so it's not people emigrating. About the only guaranteed supply is people dying - many executor sales are not in great nick.

To further prove my point, one of the issues in the current supply issues is pent up demand from people who have stayed put until now in property that perhaps isn't suitable, waiting for the market to recover. We also have a huge proportion of one off 'accidental landlords'.

About the only group more delusional than there will not be a crash brigade are the ones who think it's in anyway a good thing and that they're going to get some sort of a bargain because of it.

jimgoose

donegaLroad wrote: »

...Also, Trump's plans to drop the corporation tax rate in the US to 15% could mean relocation of some US firms back to the US or elsewhere...

Not going to happen. Most U.S. corporations located here pay Irish corporation tax on profits earned here, and U.S. rates are due on everything else, which is why they're sitting on some 2 trillion dollars to avoid the current rate of 35% over there. If Mr. T. actually does manage to get the rate down to within an asses roar of 15% or even 20%, you'll see some or most of this repatriated back to Uncle Sam. At that point, it will be more profitable than ever for American business to do what American business does, to wit go forth all over the globe and make fuck-tons of money. We can also expect this to raise the American interest rate on savings, thus releasing even more money for investment. If, as many seem to believe, corporation tax is the be-all and end-all of Irish FDI, why then do the likes of CRH operate in the USA and put up with the tax setup there? I'll tell you why - it's a relatively civilised, stable, English-speaking Common Law jurisdiction with access to a market of hundreds of millions. Sound familiar?

jimgoose

Samuel T. Cogley wrote: »

The last crash we had was pretty bad - I think most would agree there. I was in the happy position of being able to buy during it. It took until the upswing for me to get something, albeit at the start of it.

Exactly who are all these people selling during a trough in the market? We don't repossess so it's not forced sales. Rental demand will likely still be there so it's not people emigrating. About the only guaranteed supply is people dying - many executor sales are not in great nick.

To further prove my point, one of the issues in the current supply issues is pent up demand from people who have stayed put until now in property that perhaps isn't suitable, waiting for the market to recover. We also have a huge proportion of one off 'accidental landlords'.

About the only group more delusional than there will not be a crash brigade are the ones who think it's in anyway a good thing and that they're going to get some sort of a bargain because of it.

All good points well-made. I really think this is a different animal, though - before the last crash, it was all new to us - every knobjockey can be rich via property speculation, "flipping", buy-to-let etc. leading to a huge avalanche of money, most of it someone else's, chasing a limited supply of goods leading to a bubble any Dutch tulip farmer would be aghast at. These days, you have severely tightened credit and a huge and genuine demand for accommodation, largely driven by employment in/near population centres.

Sunny Disposition

People who say its not a bubble are effectively saying there's going to be a soft landing. Maybe that will be the case this time, but I would say anyone in their mid 30s or older will be very wary of that kind of talk now. Heard a report the other morning that property prices will go up by 10% this year, that is obviously something that can't happen many years in a row.
One of the only positive things about the last boom and bust is that Irish society is now looking at house price growth very differently, rising house prices are seen as a problem rather than an indicator of a strong economy, which wasn't really the case pre-crash.

jimgoose

Sunny Disposition wrote: »

...One of the only positive things about the last boom and bust is that Irish society is now looking at house price growth very differently, rising house prices are seen as a problem rather than an indicator of a strong economy, which wasn't really the case pre-crash.

That's sort of like what I was saying while ago - in the early 2000s we were all looking on cabbage-lookin' saying "Jaysis, this is great - we're all rich!" :pac:

Jawgap

Sunny Disposition wrote: »

People who say its not a bubble are effectively saying there's going to be a soft landing. Maybe that will be the case this time, but I would say anyone in their mid 30s or older will be very wary of that kind of talk now. Heard a report the other morning that property prices will go up by 10% this year, that is obviously something that can't happen many years in a row.
One of the only positive things about the last boom and bust is that Irish society is now looking at house price growth very differently, rising house prices are seen as a problem rather than an indicator of a strong economy, which wasn't really the case pre-crash.

No, they're not. The two things are not related.

I think when Daft are showing that there are only 700 or so 3+ bed properties for sale at less than €350,000 in Dublin City, (and a further 100 similar in Dublin Commuter Towns) it's relatively safe to say the problem is on the supply side.

Drop your requirement to 2 beds and less than €350,000 and you'll find there's 1,303 properties in Dublin City and 149 in the commuter towns.

How the supply is managed will dictate whether growth continues, lands softly or plummets in a fiery mess!

donegaLroad

Irish mortgage rates still nearly double euro area average

Variable rate holders continue to pay price for profligate bank lending during boom years
 
Irish mortgage interest rates remain nearly double the euro area average, according to data published by the Central Bank on Friday.

The weighted average interest rate on new mortgages, excluding renegotiations, was 3.38 per cent in November, down 28 basis points year-on-year. The equivalent euro area rate was 1.72 per cent.

Mortgage interest rates in Ireland used to reflect the main European Central Bank (ECB) lending rate, primarily because of the high proportion of tracker mortgages issued during the boom years.

The more recent divergence reflects the premium Irish banks have attached to variable rate mortgages issued since the start of the financial crisis.

Lenders here have resisted political pressure to lower their rates, insisting that lending into to Irish market represents a riskier proposition.

They also argue that Irish costs remain higher because of the higher funding costs they face as a result of the crisis.

Variable rates can rise or fall depending on wholesale interest rates, which are set by the ECB, though banks are not obliged to pass these changes on to customers.

Irish home buyers are paying way over the odds, and are getting alot less bang for their buck.

I wouldn't be buying in Ireland until bank lending rates normalise.

jimgoose

donegaLroad wrote: »

Irish mortgage rates still nearly double euro area average...

In fairness now, a lot of that is because of bastards like me with tracker rates. :pac:

dasdog

KwackerJack wrote: »

I'm waiting till it goes boom AGAIN then I'm buying dirt cheap ðŸ˜

While its not of US subprime levels once the Asian money flees you can probably get something in Canada. East coast Australia too if that goes, same Asian exodus applies to these commodity based economies. I don't see signals of it spreading yet but if the Russian/Chinese money, some of it laundered, leaves other cities like London you never know.

Last night, Moody’s downgraded the Toronto-Dominion Bank, the Bank of Montreal, the Bank of Nova Scotia, the Canadian Imperial Bank of Commerce, the National Bank of Canada, and the Royal Bank of Canada. The move represents a dramatic loss of confidence in Canada’s banking sector as the cited institutions – Canada’s “Big Six” – are responsible for the lion’s share of the country’s banking and hold a combined total of over $3 trillion in assets.

Mr. Incognito

Another Bust is inevitable and it will start next year for the following reasons;

1. Roughtly 400,000 units of empty stock are warehoused for the CGT 7 year relief together with stock the Banks and Foreign funds are sitting on.

I was at Auctions in December 2013 where foreign investors were killing themselves to hoover up stock to avail of this. This will all start to be dumped on the market next year.

2. No regulation. The sensible central bank rules which demand deposits have so many exceptions that they really have been bent to the point of being broken now. There are 20,000 approved mortgages but there is no where that level of savings in the banks to match it if the rules were being enforced.

3. Predatory Lending practices. The Banks have learnt nothing and there is no real examination of repayment capacity.

4. Overvalue. Land is still significantly overvalued owing to 1 above.

I suspect that in the early part of 2018 the first of this stock will become available and keep prices neutral as supply meets demand. In 2019 and particulary 2019 it will drop significantly leading to another banking crisis and inevitable crash.

Samuel T. Cogley

Where does the 400K units figure come from, that seems like an awful lot of empty units!

oppenheimer1

KwackerJack wrote: »

Watching Find me a home on RTE.............Just waiting for the big bubble to go bang again!

We really are as thick as 2 planks!!

Some 3 bed house (Kimmage) starting at 300k and rising to over 450k before sale agreed.

I'm waiting till it goes boom AGAIN then I'm buying dirt cheap ?

A bubble exists when people are chasing property with an eye on a return. Typically the this involves using borrowed money to leverage the gains.

What we have now is a restricted supply and restricted credit environment. Prices are riding because supply cannot meet demand.

scamalert

seems like yesterday people clinging to their houses in middle of nowhere because suddenly they lost jobs or could afford to pay up,some people just dont learn.

tempnam

Mr_Muffin wrote: »

With the obvious lack of housing in the country can someone explain why developers are not building houses as fast as they can these days? Serious question. Is it due to the lack of funding/finance available?

Atlantic Dawn wrote: »

I can't really understand why they are not building them fast either, I think the main issue is lack of access to finance, the banks want actual business plans and previous experience in the industry. The banks themselves don't have access to money mountains that they had in the past. They are not giving full non guaranteed loans like in the old days for some lad with a few fields in the back arse of nowhere to fully build 300 houses with not a single one sold.

As of 2016 the average cost of building a 3 bed semi in the greater Dublin area is €330,000

When you factor in the fact that a developer needs to make a profit (otherwise why would he bother building) they are forced to require a higher price when selling the completed houses.

Couple that with the sheer demand & competition for housing in the country at the moment and prices are bound to increase.

Interestingly, of the €330,000 cost to build a house:
"The construction costs – or “hard costs” - came to €150,000, amounting to less than half (45pc) of the total cost of building the house.

The remaining €180,000 consists mainly of “soft costs” such as the land and acquisition costs of €57,000 (17pc of total), VAT of €39,000 (12pc) and a margin of €38,000 (11pc)".

Sources:
http://www.independent.ie/irish-news/surveyors-break-down-the-cost-of-building-a-threebed-semi-d-in-dublin-34726020.html

https://www.scsi.ie/resources/2016/pdf/SCSI_the_real_cost_of_new_house_delivery_2016

https://www.scsi.ie/documents/get_lob?id=972&field=file

domrush

Mr. Incognito wrote: »

Another Bust is inevitable and it will start next year for the following reasons;

1. Roughtly 400,000 units of empty stock are warehoused for the CGT 7 year relief together with stock the Banks and Foreign funds are sitting on.

I was at Auctions in December 2013 where foreign investors were killing themselves to hoover up stock to avail of this. This will all start to be dumped on the market next year.

2. No regulation. The sensible central bank rules which demand deposits have so many exceptions that they really have been bent to the point of being broken now. There are 20,000 approved mortgages but there is no where that level of savings in the banks to match it if the rules were being enforced.

3. Predatory Lending practices. The Banks have learnt nothing and there is no real examination of repayment capacity.

4. Overvalue. Land is still significantly overvalued owing to 1 above.

I suspect that in the early part of 2018 the first of this stock will become available and keep prices neutral as supply meets demand. In 2019 and particulary 2019 it will drop significantly leading to another banking crisis and inevitable crash.

Have you any sources for this? Anecdotal evidence means nothing. CSO listed total vacant units at 260k, the majority in the BMW region where prices are still low, I highly doubt vulture funds are buying property in Leitrim, Donegal, Carlow, Mayo etc.

Whilst the initial lending rules have been relaxed banks aren't lending in the same reckless manner to the consumer, hundreds of threads in this accommodation and property forum about people not being able to get enough credit to buy in Dublin.

Similarly I'm not sure why another banking crisis would happen as a result of house prices dropping, circumstances aren't the same. There's no global recession, there's no reckless property development lending taking place.

Just because house prices are rising doesn't mean there's an immediate crash in the future . Maybe 4/5 years down the line when supply catches up, certainly not next year.

SEPT 23 1989

I think i would buy a renovated canal barge for cash to live in looking at the way things are going again

Samuel T. Cogley

SEPT 23 1989 wrote: »

I think i would buy a renovated canal barge for cash to live in looking at the way things are going again

Not sure about a canal but the best night's sleep you'll ever have is on a boat.

donegaLroad

jimgoose wrote: »

In fairness now, a lot of that is because of bastards like me with tracker rates. :pac:

and also because of the government's failure to put pressure on the banks to lower their rates