Property Market 2018

Bob24

Diarmuid wrote: »

No, they are giving the electorate exactly what they want. Rising property prices give the majority, who are home owners, a nice fuzzy feeling of illusionary wealth. In return they re-elect politicians to keep it that way.

Rinse and repeat. Anyone who thinks the current trajectory isn't going to end in 2007-esque Celtic Tiger behaviour is really fooling themselves. The only thing we learned from the crash is that if you stop paying your mortgage when it all goes tits up, is that you'll keep your home. Just like the 30% who did this time around. It's a win win! :rolleyes:

Yes. Having said that while I’m definitely not fond of EU bureaucracy, I am hoping in this case the agreements and regulatory adjustments made during the previous crisis will limit this a little.

i.e. if a brilliant Irish government was pressure the central bank to allow 100% mortgages, EU supervision authorities would jump in. Of course there are always work around though, but hopefully there are only that many grants you can give before it becomes too obvious you are using they to circumvent Eurozone commitments.

MayoSalmon

Diarmuid wrote: »

No, they are giving the electorate exactly what they want. Rising property prices give the majority, who are home owners, a nice fuzzy feeling of illusionary wealth. In return they re-elect politicians to keep it that way.

Rinse and repeat. Anyone who thinks the current trajectory isn't going to end in 2007-esque Celtic Tiger behaviour is really fooling themselves. The only thing we learned from the crash is that if you stop paying your mortgage when it all goes tits up, is that you'll keep your home. Just like the 30% who did this time around. It's a win win! :rolleyes:

What type of crash are you expecting...we are only building 9,000 homes a year!

Crash we were up on 80,000

Wanderer78

MayoSalmon wrote:

What type of crash are you expecting...we are only building 9,000 homes a year!

The disturbing thing is, it seems many think economic crashes can only come from internally credit fueled housing bubbles, but this is not necessarily true, a multitude of reasons can cause crashes, I do think our next crash could be caused from external factors, and potentially could be big, we simply do not know, but if it occurs in the near future, this crisis has the potential to turn catastrophic very quickly

draiochtanois

This post has been deleted.

Cyrus

Wanderer78 wrote: »

The disturbing thing is, it seems many think economic crashes can only come from internally credit fueled housing bubbles, but this is not necessarily true, a multitude of reasons can cause crashes, I do think our next crash could be caused from external factors, and potentially could be big, we simply do not know, but if it occurs in the near future, this crisis has the potential to turn catastrophic very quickly

The last crash was external factors too, but a lot of people ardently believe there will be another crash just because we had one in 2008, doesnt work like that

MayoSalmon

Wanderer78 wrote: »

The disturbing thing is, it seems many think economic crashes can only come from internally credit fueled housing bubbles, but this is not necessarily true, a multitude of reasons can cause crashes, I do think our next crash could be caused from external factors, and potentially could be big, we simply do not know, but if it occurs in the near future, this crisis has the potential to turn catastrophic very quickly

While that maybe very true I am yet to see and read about a housing crash that has the main fundamentals at play in the Irish market at present or anything similar.

No credit bubble
Very little supply
Tremendous demand
High Rents

Has this kind of crash happened in any market around the world where there is evidence this main fundamentals were present, happy to be proved wrong but need to see it!

Wanderer78

Cyrus wrote:

The last crash was external factors too, but a lot of people ardently believe there will be another crash just because we had one in 2008, doesnt work like that

Yup I will agree, but it's important to keep in mind how fragile our global economy is at the moment, and it's not looking too good for open economies such as ours if a major shock occurs, we could be affected badly, we simply don't know for sure

Cyrus

Wanderer78 wrote: »

Yup I will agree, but it's important to keep in mind how fragile our global economy is at the moment, and it's not looking too good for open economies such as ours if a major shock occurs, we could be affected badly, we simply don't know for sure

no i agree but there is nothing about or property market itself as it stands that makes a crash likely from internal factors.

zl1whqvjs75cdy

https://www.google.ie/amp/s/www.irishtimes.com/business/economy/house-prices-forecast-to-rise-by-10-in-2018-1.3457389%3fmode=amp

More grim news.

manonboard

draiochtanois wrote: »

This post has been deleted.

My understanding of what is meant by illusion is that although the market value goes up, its all relative since you need to buy/rent a new home to to live in.

It really benefits people who already have multiple properties, but single home owners are not gaining wealth since it just needs to be respent when then need a place to live.
If everyone got a million euros today, it would be worth practically nothing due to readjustment.

There is alot of poverty being created now due to rent prices etc which will affect people who have less means of capital production in the first place.
So really it just helps feed those who already have.

Boatswain

Wanderer78 wrote: »

The disturbing thing is, it seems many think economic crashes can only come from internally credit fueled housing bubbles, but this is not necessarily true, a multitude of reasons can cause crashes, I do think our next crash could be caused from external factors, and potentially could be big, we simply do not know, but if it occurs in the near future, this crisis has the potential to turn catastrophic very quickly

There seems a lot of these "sky is falling" type posts lately on here, referencing some mysterious future "event" that will cause Irish property prices to crash again and like your post nobody seems able to provide any details to back up this assertion.

The facts all point the other way.

Our economy is thriving, unemployment is ~6% - the lowest in a decade.

Population is increasing, estimated +1 million by 2040.

There's a chronic shortage of housing supply in urban areas, yes building is catching up (slowly) but Davy stockbrokers estimate we need 35,000 - 50,000 units per year up 2021 to meet current demand. Actual output right now is only 15,000 - 20,000 units per year.

Central bank rules on loan to income ratios and deposit requirements have put the brakes on another credit-fueled bubble, and are preventing people taking on unmanageable or unsustainable levels of debt.

Despite the problems we have with health, transport, etc. Ireland is a modern, progressive, English speaking country with strong agriculture/tourism/financial/IT and services industries. We have immigration from nearly every country in the world.

For some reason there's a cohort of people who seem to think Irish property is and always should be worthless and that when our economy is doing well resulting in rising prices, it's just a temporary glitch until the next recession (which apparently should be the economy's natural state)..

I'm not naive though and appreciate there are factors which could cause house prices to fall in the future (rising interest rates being the obvious one, mass repossessions could be another). But running around shouting about the impending doom without providing anything of substance to back this up is just scaremongering and misleading.

Arthur Daley

Boatswain wrote: »

Our economy is thriving, unemployment is ~6% - the lowest in a decade.

Population is increasing, estimated +1 million by 2040.

There's a chronic shortage of housing supply in urban areas, yes building is catching up (slowly) but Davy stockbrokers estimate we need 35,000 - 50,000 units per year up 2021 to meet current demand. Actual output right now is only 15,000 - 20,000 units per year.

Central bank rules on loan to income ratios and deposit requirements have put the brakes on another credit-fueled bubble, and are preventing people taking on unmanageable or unsustainable levels of debt.

Despite the problems we have with health, transport, etc. Ireland is a modern, progressive, English speaking country with strong agriculture/tourism/financial/IT and services industries. We have immigration from nearly every country in the world.

With the exception of the Central Bank intervention, all of the above could have applied to the Greater Dublin area in 2007. Didn't prevent a huge adjustment then, with years of introspection by many people to try understand what went wrong, and how they could avoid the same mistakes again.

We have over half a million more people in ROI compared to 2006. That doesn't mean the average person is any wealthier. Just that there are more of us, and so with roughly the same number of buildings to dwell in, it is not rocket science that those not already established in a dwelling are finding it a tough market.

Franz Von Peppercorn

Assetbacked wrote: »

I’m not a big drinker and prefer to get up very early to just be up and active. Is your brother more into socialising?

Jesus. No he’s not. He’s married with kids.

The presumption there beggars belief.

Bob24

Cyrus wrote: »

The last crash was external factors too, but a lot of people ardently believe there will be another crash just because we had one in 2008, doesnt work like that

Well it was a mix. External factors obviously increased the extend of the crash and helped trigger it, but we did have very serious policy induced internal factors as well and while not being heard there were people warning about it.

I would be enclined to think the next crash will be triggered by external factor but will uncover some of the dust we still have hidden under the carpet (many leftover non-performing mortgages and fragile borrowers from the previous crash) as well as building up on any mistake we might have done in the pay few years.

Franz Von Peppercorn

Bob24 wrote: »

Well it was a mix. External factors obviously increased the extend of the crash and helped trigger it, but we did have very serious policy induced internal factors as well and while not being heard there were people warning about it.

I would be enclined to think the next crash will be triggered by external factor but will uncover some of the dust we still have hidden under the carpet (many leftover non-performing mortgages and fragile borrowers from the previous crash) as well as building up on any mistake we might have done in the pay few years.

Obvious external factor is an increase in interest rates.

Cyrus

Bob24 wrote: »

Well it was a mix. External factors obviously increased the extend of the crash and helped trigger it, but we did have very serious policy induced internal factors as well and while not being heard there were people warning about it.

I would be enclined to think the next crash will be triggered by external factor but will uncover some of the dust we still have hidden under the carpet (many leftover non-performing mortgages and fragile borrowers from the previous crash) as well as building up on any mistake we might have done in the pay few years.

crash was caused by external factors, the extent of the crash was down to internal factors.

Wanderer78

Cyrus wrote: »

crash was caused by external factors, the extent of the crash was down to internal factors.

maybe it was both?

OwlsZat

draiochtanois wrote: »

This post has been deleted.

The 1.75% interest rate reduction on my mortgage rate is illusionary?

Lifting thousands out of negative equity and allowing them to sell for a profit is illusionary?

[/quote]

Ya it is illusionary. You overpaid for your property and paid in excess of it's intrinsic worth. The only thing making it appear to be worth the same amount again is the housing supply shortage.
The very thing that's causing someone else to overpay for the same asset. Open up supply massively and the illusion falls flat on it's face.

Cyrus

OwlsZat wrote: »

Ya it is illusionary. You overpaid for your property and paid in excess of it's intrinsic worth. The only thing making it appear to be worth the same amount again is the housing supply shortage.
The very thing that's causing someone else to overpay for the same asset. Open up supply massively and the illusion falls flat on it's face.

so whats the intrinsic worth of a 4 bedroom house in Clonsilla? and in Ballsbridge?

Diarmuid

Arthur Daley wrote: »

With the exception of the Central Bank intervention, all of the above could have applied to the Greater Dublin area in 2007.

And don't doubt that with a few years of worsening reports of people queuing to buy houses, that the government won't find ways around the credit limits. What the people want, the people will get.

CalRobert

Cyrus wrote: »

so whats the intrinsic worth of a 4 bedroom house in Clonsilla? and in Ballsbridge?

Of the house, or the land?

Either way, without getting philosophical, it might be the amount a person is willing to pay for it if they didn't have a sense that it was going to go up or down in price out of line with inflation. I'm sure I'd feel MUCH differently about housing prices if I didn't have a vague sense of "oh my god if I don't get one now I'll be 40 and looking at places in Tallaght for 850 grand".

And it's easy to say that it'll pop, but then, you only live so long and how long do you want to not own your home? I come from a place where instead of popping it plateaued at best starting from a runup in prices around 20 years ago..

Colonel Claptrap

The international credit markets seized up. This was the number 1 contributing factor to our recession and the global recession.

But this narrative doesn't suit individuals in the media, alphabet soup or posters here as they can't blame everything on the government.

Our poorly regulated banking sector and over reliance on the property/construction sector exacerbated an already difficult financial situation.

Yet everyone blames our banks as the CAUSE of the recession. They also bizarrely believe burning bondholders would somehow have prevented the global credit crunch from reaching our shores.

Few people realise how lucky we were to come out the otherside with a damaged but functional economy. Take a look at how burning bondholders helped Venezuela. People are dying from malnourishment. A bit of perspective wouldn't go amiss in these discussions.

Diarmuid

Colonel Claptrap wrote: »

The international credit markets seized up. This was the number 1 contributing factor to our recession and the global recession..

That was the trigger. We had a property crash because we had a bubble in our property market.

Cyrus

Diarmuid wrote: »

That was the trigger. We had a property crash because we had a bubble in our property market.

without the trigger there was no crash

Bob24

Cyrus wrote: »

crash was caused by external factors, the extent of the crash was down to internal factors.

I wouldn’t put it that way.

It would be like saying the reason I had an accident is that there was a pothole on the road, the extend of the accident was down to me being drunk driving.

Reality is that the specific pothole might have triggered the accident and made it worse so it obviously played a part, but in good part that accident was my responsability and if it hadn’t been that pothole it could have been something else triggering it (or even me crashing on my own).

Saying our property crash was caused by the financial crisis is like saying the pothole caused my accident. It is convenient to escape responsability but the reality is that many countries went through the same crisis without such a property crash and many people have been driving on that pothole without crashing. In both cases the crash was meant to happen.

draiochtanois

This post has been deleted.

Cyrus

draiochtanois wrote: »

This post has been deleted.

its the plot cost that dictates though and thats the thing that moves up and down, thats why there isnt an intrinsic value, its more what you can afford where you can afford it.

OwlsZat

Sorry I thought your comment on negative equity applied to yourself, guess not.

Boatswain

Arthur Daley wrote: »

With the exception of the Central Bank intervention, all of the above could have applied to the Greater Dublin area in 2007.

CB rules + chronic lack of supply are the major differences now.
Demand is one of the most powerful market forces on the planet.
Lack of supply = increased demand.
So no, the circumstances are very different now than in 2007.
2007 prices were largely set by people borrowing up to 10 times their income and not requiring any deposits.
This is a fundamental point because people are assuming we are in 2007 again because prices are near that level, and 2008-2013 will repeat itself soon.
The recession started in 2008 was one of the worst in global history, events like that don't just come around every 10 years. Lessons have been learned by central banks and governments around the world to try prevent a repeat.

Bob24

Boatswain wrote: »

CB rules + chronic lack of supply are the major differences now.

But wasn’t there also a chronic lack of supply in Dublin during the years leading to the crisis?