Why "demand" for hosing will not prevent another property crash.

realitykeeper

Cookie_Monster wrote: »

There's nothing in that to indicate any sort of collapse is likely. At best it is highlighting some over value of certain assets, but nothing in regards the collapse of western society, nor is it advocating slashing wages, establishing work/poor camps, the return of the easter bunny or whatever other rubbish you continually spout.

You mean the stock and bond markets? That encompasses quite a lot. The QE programs has fed trillions into government and corporate bonds, if they fail it will take many trillions more to attempt a rescue and the currencies will fail as a consequence.

dr.fuzzenstein

realitykeeper wrote: »

You mean the stock and bond markets? That encompasses quite a lot. The QE programs has fed trillions into government and corporate bonds, if they fail it will take many trillions more to attempt a rescue and the currencies will fail as a consequence.

There will be a soft landing
(I'll get me coat)

Jawgap

realitykeeper wrote: »

This link shows an article from today`s Irish Examiner and it touches on my concerns regarding the Irish and global economy. Many of the issues I raised here and in other threads are identified in this article as presenting clear and present danger. These include low interest rates over many years, QE and such. Unfortunately, such warnings are too few and at this stage to late for the macro economy.


http://www.irishexaminer.com/business/columnists/oliver-mangan/theres-a-clear-and-present-danger-in-keeping-interest-rates-extremely-low-450684.html

OK, you're clearly not interested in answering questions so it looks like we're moving on to this.

It's an article arguing for an increase in interest rates......by a chief economist of a bank about to be re-floated on the market.....

Oliver Mangan is chief economist at AIB

....excuse my cynicism but "....he would say that, wouldn't he?" He's hardly going to argue for interest rates to be kept low anymore than a turkey is going to vote for Christmas.....low interest rates mean the capital reserves his employer has to hold in cash and near-cash notes generates a very low yield which impacts severely profitability.

Anyway, I'll see your Examiner article and raise you an FT article

Euro enjoys renaissance as investors pivot to continent

Wanderer78

realitykeeper wrote:

You mean the stock and bond markets? That encompasses quite a lot. The QE programs has fed trillions into government and corporate bonds, if they fail it will take many trillions more to attempt a rescue and the currencies will fail as a consequence.

I wouldn't overly worry about that, sure the imf are there to back up the whole system if it all goes down, and they're just a great bunch, aren't they?

realitykeeper

Jawgap wrote: »

Anyway, I'll see your Examiner article and raise you an FT article

Euro enjoys renaissance as investors pivot to continent

It says I have to subscribe to read the article and I don`t subscribe to fake news. That said, I will address the headline. If the euro is enjoying a renaissance it is only because of investor`s desperate search for yield. They are also investing in bonds that are guaranteed to lose money. That would not be happening if the economy of Europe was truly perceived as safe.

Jawgap

realitykeeper wrote: »

It says I have to subscribe to read the article and I don`t subscribe to fake news. That said, I will address the headline. If the euro is enjoying a renaissance it is only because of investor`s desperate search for yield. They are also investing in bonds that are guaranteed to lose money. That would not be happening if the economy of Europe was truly perceived as safe.

What makes you think the FT is fake news? And why would you accept an article written by a commentator with a self-interest over one written by a journo?

EDIT: actually, investors may well be investing in bonds but the article notes

"Playing a big role has been the flood of capital seeking European stock funds now at a record high, as is the eurozone capital account surplus."

donaghs

realitykeeper wrote: »

As for the rating agencies, they gave Ireland a AAA rating right before the economy crashed in 2008. The rising house prices are driven by credit, Simon Coveney`s helicopter money and a plethora of other manipulations of the market. The next housing crash will start this year and it will be huge. Am I wrong?

Taking the longer view, Irish property prices haven't really gone up that much in recent years. And is there really huge credit available? lots of reckless lending?
Anecdotally, most people I hear of are having trouble saving deposits and getting mortgage approval.

If prices keep rising at this rate for a few years more, sure, a crash is quite likely. But I'd suspect prices will slow down as people simply cannot afford to buy houses rising at that rate. Unless we get another lending boom...

donaghs

donaghs wrote: »

Taking the longer view, Irish property prices haven't really gone up that much in recent years. And is there really huge credit available? lots of reckless lending?
Anecdotally, most people I hear of are having trouble saving deposits and getting mortgage approval.

The last data point there is over 2 years old.

Jawgap

Deleted User wrote: »

The last data point there is over 2 years old.

Here's a so more up to date data (2005 as the base)

donaghs

Jawgap wrote: »

Here's a so more up to date data (2005 as the base)

Yeh, that was the best graph I could find at the time. But the latest one shows prices still going up, but slowing since 2014. So no sign of a runaway boom just yet.

The second one uses a higher index so that the peak, trough and current rise are flattened compared to the one posted earlier. Prices aren't rising as quick as in the middle of the boom but they're rising pretty quickly. (Also the index-type graphs have their own little foibles where the same slope at 2 points in the graph can represent two very different % increases.

FreudianSlippers

realitykeeper wrote: »

I suspect the next crash will hit around November of this year.

As promised, just following up on this post. IMO this is a valid bump to this thread, as it's clear that demand for housing has increased and prices have followed. We have a supply-side issue in Ireland causing an increase in the mean reversion price; it follows that the premise of this thread is flawed, as we would need a credit issue at the moment to actually crash this property market.

National index is still 25% lower than peak 2007. I don't see a bubble here yet.

blanch152

FreudianSlippers wrote: »

As promised, just following up on this post. IMO this is a valid bump to this thread, as it's clear that demand for housing has increased and prices have followed. We have a supply-side issue in Ireland causing an increase in the mean reversion price; it follows that the premise of this thread is flawed, as we would need a credit issue at the moment to actually crash this property market.

National index is still 25% lower than peak 2007. I don't see a bubble here yet.

There are still ten days to go. That bubonic plague in Madagascar might wipe us all out meaning that property prices do collapse and the OP will be right. Probably won't be around to tell us though.

Wanderer78

FreudianSlippers wrote:

National index is still 25% lower than peak 2007. I don't see a bubble here yet.

Famous last words, it's clearly obvious we 're in a bubble, be patient though, the crash could take a while

Hitman3000

realitykeeper wrote:

I suspect the next crash will hit around November of this year.

So you have 10 days left before you are wrong again.

FreudianSlippers

Wanderer78 wrote: »

Famous last words, it's clearly obvious we 're in a bubble, be patient though, the crash could take a while

You've conveniently ignored the meat of my post. Can you please outline how, economically, we are in a bubble?

Wanderer78

FreudianSlippers wrote: »

You've conveniently ignored the meat of my post. Can you please outline how, economically, we are in a bubble?

joys of dyslexia im afraid, apologies. in my eyes, we re obviously in a bubble regarding housing prices

CIARAN_BOYLE

I've said it before and I will say it again. A hard Brexit is the most likely near term cause of a housing crash.

One thing to note is that during the recession more people moved home with families or into shared accommodation due to lack of money. These people now want their own property driving the how high boom. There is not enough stock and the occupancy of property has fallen by approx .4 a unit (half remembered statistic on a radio show, I can't support this sorry) since 2010.

For a crash to happen we need tot and this demand out by removing the extra funds and forcing people to move back in with their families. The best way to do this is to cause a general economic crash. The most likely cause of this is a hard Brexit.

It was interesting to note that exports to Britain rose in the first half of 2017 increasing our dependence on that market.

FreudianSlippers

We actually don't have any of the economic indicators of a bubble and the above two posts actually indicate why there isn't a likely bubble rather than vice versa. We have limited supply reducing the number of people entering into the market, we have comparatively high interest rates (double the EU average rate), we have difficult access to credit and limited mispricing of risk due to the minimum requirements for deposits and, most importantly, we do not have a sudden and high increase in prices.

Idbatterim

realitykeeper wrote: »

I read yesterday that the risk of another housing crash remains low according to the Moody rating agency. One journalist expressed the opinion a housing crash could be "only" 7 years away despite the present "demand" for housing.

As I see it, there is a lack of understanding regarding what constitutes "demand" for housing. What there is in this economy is desire for housing but the building of new houses remains low because there is in fact very little economic demand for housing, at least from the traditional capitalist understanding of the word.

As for the rating agencies, they gave Ireland a AAA rating right before the economy crashed in 2008. The rising house prices are driven by credit, Simon Coveney`s helicopter money and a plethora of other manipulations of the market. The next housing crash will start this year and it will be huge. Am I wrong?

I'd actually say just make up your own mind. Any body or agency that comes out with this in information. "We have a bubble " or " no we don't" they all have their own agenda and interests ...

Idbatterim

FreudianSlippers wrote: »

As promised, just following up on this post. IMO this is a valid bump to this thread, as it's clear that demand for housing has increased and prices have followed. We have a supply-side issue in Ireland causing an increase in the mean reversion price; it follows that the premise of this thread is flawed, as we would need a credit issue at the moment to actually crash this property market.

National index is still 25% lower than peak 2007. I don't see a bubble here yet.

I think the november comment was a joke. As if anyone could call the month and I think that's what the poster was making mockery of...

There is the bubble question. But in terms of affordability, I'm assuming housing in Dublin has never been less affordable ?

CIARAN_BOYLE

FreudianSlippers wrote: »

We actually don't have any of the economic indicators of a bubble and the above two posts actually indicate why there isn't a likely bubble rather than vice versa. We have limited supply reducing the number of people entering into the market, we have comparatively high interest rates (double the EU average rate), we have difficult access to credit and limited mispricing of risk due to the minimum requirements for deposits and, most importantly, we do not have a sudden and high increase in prices.

Agreed that was my point. Any housing crash will be symptomatic of an economic crash rather than having got to do with housing.

Chips Lovell

OP has been banned since starting that thread and won't be able to respond to posts directed at them.

jimmycrackcorm

CIARAN_BOYLE wrote: »

I've said it before and I will say it again. A hard Brexit is the most likely near term cause of a housing crash.

One thing to note is that during the recession more people moved home with families or into shared accommodation due to lack of money. These people now want their own property driving the how high boom. There is not enough stock and the occupancy of property has fallen by approx .4 a unit (half remembered statistic on a radio show, I can't support this sorry) since 2010.

For a crash to happen we need tot and this demand out by removing the extra funds and forcing people to move back in with their families. The best way to do this is to cause a general economic crash. The most likely cause of this is a hard Brexit.

It was interesting to note that exports to Britain rose in the first half of 2017 increasing our dependence on that market.

A hard Brexit might actually have a positive effect on housing. It will reduce demand but as supply is likely to be still short, all it might do is stymie price rises and make housing affordable for many people who are not as dependent on Brexit exports.

FreudianSlippers

I don't see how Brexit would reduce demand?