Will the bubble burst?

FillSpectre

Beta2 wrote:

This is a very sensible idea, but remember it can be applied to both sides of the argument, just because it hasn't burst in the last few years doesn't mean it wont.

My point was and is that what suits me might not suit others.Even if there is a crash I am unlikely to lose. I am at a low risk situation that suits me. Renting to wait out the market is high risk one way or the other IMHO but others are convinced it will happen so take the risk. House prices need to be drop over 50% to effect me. To rebuild my house is about 40% of the current market price.

I do understand what a bubble is and it is speculation to say one is currently in play and not fact as many would say.

You never actually answered when it would crash but have told me that you somehow know that people are sub conciously doing. I think that kind of deductive reasoning and assumption of intent is the problem with that both sides seem to think is fine. THe problem with the economists is they have been crying wolf incorrectly for too long.

Beta2 wrote:

But if I had a mortgage of 250K on a house worth 500K and then released some equity to buy an investment property I wouldn't want to believe it either. The thoughts of even a 20% drop in prices would make me sick, so I’d blank out all rational thoughts and hope for a miracle. Maybe Ireland’s economy is special!

I already gave an example showing that it is possible to buy another property and have smaller mortgage than your neighbour. If you mortgage payment are less than 25% of your income then is it really a problem? 20% drop in the market for two properties with a mortgage less than the value in both wouldn't upset me and property investment is not generally short term. I don't know anybody who went in lightly and they know ewhat they are doing. The suggestion that they are all greedy idiots is very bias and I would think inaccurate. I have my home and no investment property. I would rather diversify but it doesn't make my house a bad investemnt as I need a home and I don't feel I would get a home in a rental.

Doom and gloom are fine if it isn't tied up in superiorty on what is essentially a personal gamble that may or may not pay off and that goes for both sides.

FillSpectre

Ambro

Let me be crystal clear. I don't agree with you and your view of what a mortgage means. I understand what way you are looking at it. I think it is skewed way of looking at considering renting is the alterantive

I have told you more than once my opinion of the words you have used and manner you speak on the issue. If nobody else thinks your terminology in this way fine but I doubt it. I stopped responding to you becasue you didn't listen and I think I have seen others do the same for the same reason. Don't believe me if you don't want to .For example your sugggest that you need repeat it again suggests I don't understand. I do and have said I do yet you either ignore,forget or think I don't undestand regardless of what I have siad. You don't cosider rent in your example so it is skewed in my eyes. I don't need you to say it again becasue I don't believe it is accurate. THis is you repeating your self again and again. SO your sense of superior view is coming through. You think you are being balanced but your not. You have one view and aren't even discussing it. There really isn't any point. I know your point of view and you are not expounding it.

You come accross as feeling superior in what you say not because I don't agree. If you are going to just repeat yourself and not listen to people there really is no point talking to you.

ambro25

FillSpectre wrote:

let me be crystal clear. I don't agree with you and your view of what a mortgage means. I understand what way you are looking at it. I think it is skewed way of looking at considering renting is the alterantive

What's my views about renting got to do with anything in this thread? Where have I discussed it?

EDIT: my apologies, Mr FillSpectre - I did indeed, to an extent:

Look at the term (35/40 years) and do the maths - we've been through this before

You may end up with more, but then again you may not - buying a property, in this respect, is no more certain than renting and using the variance (equivalent mortgage for place rented minus rent paid) to invest.

But note that the above was in the context of you disputing what 'making money' means (i.e. make money with acquiring a property, not acquire a property to live in it).

Not extolling the virtues of renting vs buying (which is, after all, an entirely personal choice). And certainly not once you've actually read what I posted: as a person you're free to do either/or./EDIT

All the same, it's interesting to note that, apparently, you would rather stonewall than recognise a fact (not an opinion or PoV) when it bites you in the @ss. And here's me thinking I was having an interesting conversation :rolleyes:

FillSpectre wrote:

I stopped responding to you becasue you didn't listen

Kinda hard, through a PC with no TS/VoIP - you mean to say "I stopped responding to you becasue you didn't agree", surely?

FillSpectre wrote:

and I think I have seen others do the same for the same reason.

Who?

FillSpectre wrote:

You don't cosider rent in your example so it is skewed in my eyes.

Why should I? This thread is about "The Bubble".

Anyhow, suit yourself

Afuera

FillSpectre wrote:

Can you explain why people taking your line last year were wrong then and the year before and before.

My view is that the predicted slowdown in house price inflation (to 3% in 2007), combined with rising interest rates, will cool the property market down. I also suspect that once things cool down it will start a more serious downturn. There were no interest rates rises a year ago and the SSIAs were nowhere near maturing then either so I'm not sure what the "line" was back then.

FillSpectre wrote:

I don't think prices will keep going up but I also don't see a crash coming just becasue prices go too high, has this happened before? I know there have been crashes just I always thought there was a reason for them.

If prices are too high for an asset then for them to return to a normal level a crash is a possible way for it to happen. The larger the upswing the greater the likelyhood of a large downturn. If you look at any historic crash from the tulips in Holland to the stock market crash of the 30`s in the US, the reason for them was simply due to assets being priced at an incorrect value. The main cause of these overvaluations were from speculation or an anticipated movement in the price.

The amount of investors in our current property market suggests that many are buying out of speculation. The perception that you just can't go wrong with property in the long term is very strong.

ambro25

@ Afuera - don't forget that the stocks are in a bit of a doldrum at the moment in US and Europe, so that might maintain the attraction for all things 'stone' some more.

Then again, whilst rising interest rates are bad for mortgages, they're good for saving - so what's the likelihood (the proportion?) of SSIA payees re-dumping the €s into higher % savings? For instance, I'm currently looking at a new Halifax UK standard saving product at 8% yearly. That's not a bad product if you are of a 'clouds on the horizon' persuasion but not risk-minded: the picture of the average saver, really...

Gateway

Bluehair wrote:

Ah yes good old boards, you can be damn sure someone else will bump this thread over the years to work out which i was

You can count on that! Right up till this bubble bursts.

FillSpectre

Afuera wrote:

There were no interest rates rises a year ago and the SSIAs were nowhere near maturing then either so I'm not sure what the "line" was back then.

I just meant the view that there will be a crash and it will be soon that is all. I don't beleive these people disappeared in a puff of smoke when it didn't happen. THe thread is a year old after all.

Afuera wrote:

If you look at any historic crash from the tulips in Holland to the stock market crash of the 30`s in the US, the reason for them was simply due to assets being priced at an incorrect value.

Not sure about the tulip cause but the US crash was casued by junk bonds not over pricing. The UK crash was connected to the stock exchange. My point is that high prices don't casue crashes they just make it possible. It could just as easily be a boom and natural cycle which is not a bubble

Afuera wrote:

The amount of investors in our current property market suggests that many are buying out of speculation. The perception that you just can't go wrong with property in the long term is very strong.

I do agree but I don't think the speculation is purely financial and for short gain. I think the irish tie to property and family may be also having an effect not just the belief in property. The investors and people are not stupid. There are stupid ones but they aren't all stupid and the banks aren't either.

Ambro

I explained myself and I explained how you come accross. You confirmed it with your many times edited taunting. You choose to ignore what I said and make yourself look quite petty and childish to boot good luck with that in your life.

Beta2

FillSpectre, I want to make my point very clear, I am not attacking you or anyone who has ever bought a house.

I am attacking the notion that house prices will rise forever, I believe that in 18 months time house prices will be lower than they are now.

I said all along that if you are happy with where you live then you have made a good investment, I would however be concerned for people who buy up to 3 years before a crash, many of these people have made huge sacrifices to get onto the ladder in the first place, they live miles from family and friends, commute 2 hours in the morning and are doing without luxuries to pay the mortgage. The ESRI said that 37% of people are struggeling to make mortgage repayments as is. These people will get burnt.

You make the point that a fall of 50% is needed to put you into negative equity, that is a good point, but what about the person across the street from you with the 100% mortgage, if that fall happens they will get screwed.

I have backed up my opinion with historical, empirical, and media based data.

I'm not a profit of doom, I think we still have a chance to get out of this without destroying the economy, but the longer this exceptional growth of house prices is allowed to continue the longer the downturn.

I don't think our economy is healthy right now, single people paying 10x their salary, or couples paying 17.5x their combined salaries to buy a house 50 miles from where they work.

My friend earns 43K a year, he recently had his mortgage application turned down to buy a 2 bed apartment in Naas. Can some one explain to me how this apartment is not overvalued? He earns much more that the average national wage, he has no other debts, he's buying in an average suburban town, but he can't afford a less than average property. (I say the apartment is less than average because its one of the smallest apartments to be had in Naas)

Lex Luthor

Beta2 wrote:

My friend earns 43K a year, he recently had his mortgage application turned down to buy a 2 bed apartment in Naas. Can some one explain to me how this apartment is not overvalued? He earns much more that the average national wage, he has no other debts, he's buying in an average suburban town, but he can't afford a less than average property. (I say the apartment is less than average because its one of the smallest apartments to be had in Naas)

2 bed apts in Naas going for nearly 300k now.

ambro25

Beta2 wrote:

I'm not a profit of doom, I think we still have a chance to get out of this without destroying the economy, but the longer this exceptional growth of house prices is allowed to continue the longer the downturn.

I don't think our economy is healthy right now, single people paying 10x their salary, or couples paying 17.5x their combined salaries to buy a house 50 miles from where they work.

There's an inherent problem in that, which goes beyond the mere "housing gone bubble" argument - but which is connected to it in quite intimate fashion.

Investment in businesses in/around Dublin is starting to erode, especially foreign investment, and this is a factor in part derivable from the housing market (there are many other considerations, not the least of which is the total cost of living in Dublin, excluding housing: e.g. higher insurance premiums, higher social life costs, etc.):

(i) no matter how good the skills of inviduals (just as good if not better than US/UK/DE/FR/etc.),

(ii) if it becomes too expensive to employ these individuals (which is fast becoming the case because it's becoming more & more expensive for them *in general* to house themselves & live),

(iii) thus directly impacting business running costs,

(iv) then businesses will increasingly be set up elsewhere and/or employ cheaper immigrant labour... as is starting to be the case.

There is a point at which even highly favourable corporate tax becomes offset by running costs over the period of investment.

This impacts the economical tissue directly (and the housing market indirectly). The web of interrelation is complex, but not to be underestimated - particularly in the context which you outline (mortgage borrowings vastly exceeding realistic repay capacity - the norm in the UK was 4.5 x combined salary not so long back), and of which we are all quite well appraised these days.

Of investment starting to dry up in Ireland (Fine Gael source, but OECD numbers)

OfInvestment perking up in 2005, but increasingly outside Dublin

Of buying to let and real numbers of same

Of [URL="http://www.finfacts.com/irelandbusinessnews/publish/article_10002284.shtml] bubbles, contrasts with other countries and what if scenarios[/url]

Afuera

FillSpectre wrote:

Not sure about the tulip cause but the US crash was casued by junk bonds not over pricing. The UK crash was connected to the stock exchange. My point is that high prices don't casue crashes they just make it possible.

Junk bonds were the result of the crash in the US, not the cause. Speculation was the cause and led bonds to be vastly overvalued.

I'm not too sure if there's any one definate theory on the cause of the housing slump in the UK but one of the main factors being mentioned at the time in the papers was that houses were unaffordable for FTBs. Have you got anything to back up that the stock exchange was a cause?

High prices don't necessarily cause crashes on their own but overvalued assets can.

FillSpectre wrote:

It could just as easily be a boom and natural cycle which is not a bubble.

Should this read "boom and bust cycle"?

FillSpectre wrote:

The investors and people are not stupid. There are stupid ones but they aren't all stupid and the banks aren't either.

Banks can go bust too. Just as countrys, cities, companies and people can.

Beta2

Lex Luthor wrote:

2 bed apts in Naas going for nearly 300k now.

Actually he's got a deposit on phase one, its 305K.

Phase 2 will be 350K according to the state agent.

I live in Naas myself, the apartments are OK but nothing special

FillSpectre

Beta2 wrote:

FillSpectre, I want to make my point very clear, I am not attacking you or anyone who has ever bought a house.

I didn't think you were

Beta2 wrote:

I am attacking the notion that house prices will rise forever, I believe that in 18 months time house prices will be lower than they are now.

I doubt that as SSIAs will still have an effect but it is as valid to say that as they will keeping going up. Why you think they will is important though. I don't know of anybody saying they will rise forever even the optomistic.

Beta2 wrote:

I said all along that if you are happy with where you live then you have made a good investment, I would however be concerned for people who buy up to 3 years before a crash, many of these people have made huge sacrifices to get onto the ladder in the first place, they live miles from family and friends, commute 2 hours in the morning and are doing without luxuries to pay the mortgage. The ESRI said that 37% of people are struggeling to make mortgage repayments as is. These people will get burnt.

I am equally concerned about them but unlike many people I don't think the investors will be stung so much as they aren't all over streching themselves. Some are but I doubt the majority is.I never heard the ERSI report . FTBs are most at risk and other people are hoping it will be investors as some kind of retribution. Some will suffer sure but not all and the investors in the market more than 3 years are very unlikely to suffer.

Beta2 wrote:

You make the point that a fall of 50% is needed to put you into negative equity, that is a good point, but what about the person across the street from you with the 100% mortgage, if that fall happens they will get screwed.

My point would be thre is nobody accross the street with 100% mortgage. I am not saying they don't exist just they aren't the huge element people say. We have heard stores of people with 100% mortgage, 4 hour round commute, kids in creche and strugling to pay bills. I know nobody close to this yet the media suggests that it is really common or at least metnion such people when complaining about something. Is it really that bad? Very few people can get 100% mortgages to start with so that would be one point and secondly I am under the impression many had SSIAs. Not saying people aren't sugffering jut not sure who the papaers and reports are talking about. I am in my early 30s and between me and the wife we have a fullish spectrum of people and nobody is in these situation and thsoe close toit (4 hour commute) do so through choice.

Beta2 wrote:

My friend earns 43K a year, he recently had his mortgage application turned down to buy a 2 bed apartment in Naas. Can some one explain to me how this apartment is not overvalued? He earns much more that the average national wage, he has no other debts, he's buying in an average suburban town, but he can't afford a less than average property. (I say the apartment is less than average because its one of the smallest apartments to be had in Naas)

Isn't the average industrial wage €35k? I agree he is paid more but not much and a single person buying on their own wasn't able to do so before so just becasue there was a time they could doesn't mean they have to now. A 2 bed appartment on a single income is better than average as an expectation.

Do I think he should be able to buy? Not really he does qualify for social/affordable housing though AFAIK. Compare his desires with an average european worker and what they can do on their own. If his want is more does that make his expectation unreasonable as we catch up with Europe?

ambro25

Afuera wrote:

I'm not too sure if there's any one definate theory on the cause of the housing slump in the UK but one of the main factors being mentioned at the time in the papers was that houses were unaffordable for FTBs. Have you got anything to back up that the stock exchange was a cause?

It wasn't the UK stock market, which did OK in 2004. (source) (and my own experience of it then and since).

I sold my property in the UK in December 2004, at what was deemed by anyone involved (estate agents, solicitors, prices in area and region until June/July 2005, media) the peak. What followed was more a hiccup than a burst. Think of the slump as a temporary flat line, but certainly not a dip: current prices in the area haven't moved that much at all, there's a slight rise but marginal, which is small potatoes compared to what goes on in Dublin

JimmySmith

There are now 2 incomes for almost every house bought.
This is completely different to the time of the UK crash even.
Now that the banks have established that one person alone cannot buy a house, and people are used to this fact of life, they will start to lend to groups of 3 and then 4.

Can all the people who were predicting a crash for the last 5 years please stand up and leave the room. you are clearly talking through your arses and have been proving it for years. If you can get it wrong for so long and still cannot admit you havent a clue what will happen you need to take a cold shower.
Nobody here knows anything about when or if there will be a crash. Nobody.

In fact the person talking the most sense here is the person who sold their house last year and consolidated at a time of his choosing, rather than trying to time the market. Thats not to say he would not have been better off waiting til this year, but who would have known? It would have been just a guess. I think he wins in the banked money stakes.

FillSpectre

Jimmy
A broken clock tells the time right twice a day don't deny the time becasue the clock is there.

It is possible and there are some indicators. WE are talking property not houses and more single people buy now with a huge increase in the number of woman buying on their own. All demographics point to an increase in single living in Ireland over the next few years. The majority of new hosuing in Dublin is single and 2 bed places. Some say it is just for money and others say it is to fit the gap in the housing stock.

Huge rise do increase possible crash situations the same as sudden snow can make conditions for avalaches.

Valid points are being made and should be listened to.

I do agree though that people who have been saying the same thing for a few years should explain themselves

Afuera

JimmySmith wrote:

Can all the people who were predicting a crash for the last 5 years please stand up and leave the room. you are clearly talking through your arses and have been proving it for years. If you can get it wrong for so long and still cannot admit you havent a clue what will happen you need to take a cold shower.
Nobody here knows anything about when or if there will be a crash. Nobody.

I have not been predicting a crash for the last five years but increasingly I have been thinking that it may be unavoidable.

Do you believe prices will continue to rise? Or do you believe that there will be a soft landing? Or do you not care and prefer to buy/invest without really thinking about any possible negative outcomes?

JimmySmith

Afuera wrote:

I have not been predicting a crash for the last five years but increasingly I have been thinking that it may be unavoidable.

Do you believe prices will continue to rise? Or do you believe that there will be a soft landing? Or do you not care and prefer to buy/invest without really thinking about any possible negative outcomes?

You can run all of the scenarios you like. None run by the economists (who get paid for it) have been right in years.
At the end of the day, you buy a house and you live in it. Then when you have spare cash if you feel like betting on black do. But its a gamble and should be seen as no more.
I did this very thing a good few years ago. Sold some house over the last couple of years. Now have some houses and no mortgages. Even though i thought i knew it all and tried to time the markets i now realise i hadnt a clue about the markets at all (i did more analysis than i'm seeing in this thread too). It could have easily ended in tears for me and i wont pretend otherwise. The ball just landed on black which i bet on.
I'm going to cash out over the next 6 months or so and bank a few bob, because i havent a clue whats next and i know it.

ambro25

Afuera wrote:

I have not been predicting a crash for the last five years but increasingly I have been thinking that it may be unavoidable.

Echoed.

Afuera wrote:

Do you believe prices will continue to rise?

Yes. For a while at least. There's no denying the forthcoming SSIA effect to boost funds available for deposits (to increase same or at least prop them on asset funds as opposed to borrowed funds)

Or do you believe that there will be a soft landing?

Eventually. Probably more like the UK 'slump' (not quite a 'burst' of dot.comn proportions, which is what 'Bubble-predictors' have been envisaging - it'd be nice to be wrong but...;) ). Think of it as a collective 'intake of breath' - but not panic.

Or do you not care and prefer to buy/invest without really thinking about any possible negative outcomes?

I really think buying and investing should be dissociated (eating humble pie & winking at FillSpectre ). If buying not-to-invest, the outcome never really is 'negative' (barring repayment default, the house will be yours at term no matter what (unless you have an endowment mortgage-now there's risk!)).

JimmySmith has got it nailed with the 'bet' analogy, because investment is always a matter of timing (and deciding on the right 'timing' can be a matter of luck in good proportion). Good timing and the ball goes on black (sell at market peak - I was lucky in the UK), bad timing and the ball goes on red (which can just as easily be a market crash as a divestment halfway into the growth cyle and losing out on the other half of the cycle).

Beta2

FillSpectre wrote:

Isn't the average industrial wage €35k?

According to the CSO as of last month it stood at 27K. so he earns 60% more than the average industrial wage.

FillSpectre wrote:

2 bed appartment on a single income is better than average as an expectation.

An average Dublin Expectation

FillSpectre wrote:

Compare his desires with an average european worker and what they can do on their own. If his want is more does that make his expectation unreasonable as we catch up with Europe?

I think you missed the point I was making, people in europe who earn 60% more than average typically can buy a better than average house.

FillSpectre wrote:

My point would be thre is nobody accross the street with 100% mortgage

Just guessing here but at some stage in the past FTBers were able to purchase a house near yours? But today they cant. Where I live the neighbours were first time buyers 10 years ago(hes an ambulance driver, wife doesn't work), they paid 1 tenth of what it is worth today. Today FTBers like my friend (who earn 60% more than industrial average) can't even buy a small 2 bed a quarter of a mile away. That suggests to me that something is imbalanced.

FillSpectre

Beta2 wrote:

According to the CSO as of last month it stood at 27K. so he earns 60% more than the average industrial wage.

No tha tis not what the CSO say

http://www.cso.ie/statistics/indearnings.htm

http://www.cso.ie/statistics/earnings_banking_ins_building_soc.htm

He is earning more than the average industrial wage about 11k (35% more)

And only 2k more than a banking type job. (7%)

Not really amazing money or much more tha

Beta2 wrote:

An average Dublin Expectation

I did say compare with an average European. I have friends living abroad and places are smaller and not owned. Really the claim that it is all terrible hear is a bit of an exageration

Beta2 wrote:

I think you missed the point I was making, people in europe who earn 60% more than average typically can buy a better than average house.

You over estimate the figure and I agree there is a change but I am not claiming it is bad you are saying it is. I think it is an inevitability that homeownership has to drop in Ireland to line up with the rest of the EU and the world. A single person earning 7% more than the average white collor job is not some amazing buying power and not really surprising that they can't get a mortgage considering there are so many people working.

If you were right about the 60% I think you would have a point. I don't mean to suggest you are just simply wrong it is just that what you based your view on is not right. Given that Ithink what I said stands:o

Beta2

http://www.cso.ie/statistics/indearnings.htm Show an average industrial wage of 31707Eur for a male and and 22415Eur for a female. I built in the assumption that single first time buyers were split evenly at 50-50 between men and women which gives a figure of 27061Eur as the average industrial wage. You on ther other hand just took the figure that suited you.

Getting back to the original question:

Will the bubble burst? This assumes there is a bubble, if there is a bubble it will bust, but when no one can say for sure.

However, can we say for sure that there is a bubble, no.

Thats all I'm gonna say on the topic

dochasach

FillSpectre wrote:

...
I did say compare with an average European. I have friends living abroad and places are smaller and not owned. Really the claim that it is all terrible hear is a bit of an exageration

As of 3Q 05, Ireland had one of the worst housing affordability indexes, with an average house costing 6 times annual income:

http://www.demographia.com/dhi-ix2005q3.pdf

Given that Irish house prices have risen significantly since 3Q05 (and yet are steady or "correcting" in some other unaffordable markets), I wonder when we will be the most rareified housing market in the world?

FillSpectre

Beta2 wrote:

http://www.cso.ie/statistics/indearnings.htm Show an average industrial wage of 31707Eur for a male and and 22415Eur for a female. I built in the assumption that single first time buyers were split evenly at 50-50 between men and women which gives a figure of 27061Eur as the average industrial wage. You on ther other hand just took the figure that suited you.

I used the first figures I saw. They are from the same source. Average industrial wage however is not average wage. THe figures you used are more suited to your arguement but I pointed out that their is a difference from average industrial wage and office workers. Your friend's wage is not a massive wage still stands. He is also trying to buy a home on his own which is not an average of home buying.


Will the bubble burst? This assumes there is a bubble, if there is a bubble it will bust, but when no one can say for sure.

However, can we say for sure that there is a bubble, no.

I agree. I feel it has to be said that those who insist it is a bubble and it will burst are starting with assumptions. To deny the possibility there is a bubble is also making assumptions.

dochasach wrote:

As of 3Q 05, Ireland had one of the worst housing affordability indexes, with an average house costing 6 times annual income:

I did say European average. We are an old country with inheritated issues. USA and Australia are not good comparisons as a result. If you compare our country with the rest of Europe you would get a fair comparison. Irish society has changed elsewhere so I would guess homeownership is another thing that has to change

dochasach

FillSpectre wrote:

I did say European average. We are an old country with inheritated issues. USA and Australia are not good comparisons as a result. If you compare our country with the rest of Europe you would get a fair comparison. Irish society has changed elsewhere so I would guess homeownership is another thing that has to change

I'd like to see these numbers for other european markets, but of the markets in the demographia survey, all of them had a median multiple of about 3 in the mid 1990s (Ireland, U.K., Austrailia, New Zealand, U.S.)
nflating.

FillSpectre

dochasach wrote:

I'd like to see these numbers for other european markets, but of the markets in the demographia survey, all of them had a median multiple of about 3 in the mid 1990s (Ireland, U.K., Austrailia, New Zealand, U.S.)
nflating.

So would I . My point is from my experience in other countries property owning expectation s are completely differnt. THe properties are also more varied than here. A 3 bed semi is not the expectation of a single person in the rest of Europe it is only here. Irish expectations are limited becasue we haven't seen any other way in this country. Comparison with non compariable goods whether they ever met or not is flawed IMHO. 3 new world colonies with one being the most poluting,richest and unequal societies in the world is not a fair comparison if you ask me.

ambro25

I can research FR quite well, for some maybe-useful comparisons:

source

Ralentissement des prix, sous l'effet de la désolvabilisation des ménages - 25/04/2006

Les prix de l'immobilier en France, en progression de 120 % par rapport à leurs plus bas de 1996, atteignent un seuil critique d'après Olivier Eluère du Crédit Agricole. Leur progression, qui a diminué tout au long de 2005, devrait continuer à fléchir dans le courant de 2006, avec une hausse prévue de 5 % sur 2006 (pour rappel, la FNAIM table sur 9-10 %). Deux facteurs commencent à peser sur le marché : le risque de hausse des taux, déjà mentionné dans un article précédent de ce site, et l'arrivée en masse des Robiens, qui commence à déséquilibrer localement les marchés locatifs. Pour autant, la banque verte ne prévoit aucune baisse et ne perçoit pas de situation de bulle sur le marché pour deux raisons : la solvabilité des ménages reste meilleure qu'en 1991 (les annuités de crédit habitat représentent aujourd'hui 38 % des revenus d'un ménage parisien contre 55% à l'époque) et il n'y a pas de comportement spéculatif sur le marché (les anticipations des acteurs sont raisonnables sur les loyers, l'inflation et les revenus et la prime de risque est positive). Au niveau national, la solvabilité s'effrite également puisqu'un ménage moyen dépense aujourd'hui 31 % de son revenu pour un achat immobilier. Le rapport évalue qu'une hausse des taux de 1 % ferait monter ce ratio à 34 %, avec pour effet de freiner voire baisser les prix dans certaines zones ponctuelles.

Prices in FR slowing down, expected to grow by 5% instead of predicted 9-10%. Main factors affecting slowdown are (i) likely rise in interest rates and (ii) the 'Robiens' (something akin to SSIA, but only for real estate, as an operation of the "Law Robien"-however, arriving at term in the FR context, so it's the 'end of it', not the 'beginning of it' when looking at SSIAs). No bubble perceived because (i) households have better capacity to repay today than before (mortgage repayment represents smaller portion of income) and (ii) no speculation perceived in the market. However, capacity to repay eroding, with 31% of average household income required to pay mortgage, which a 1% interest rate increase would raise to 34%.

5672 € du m2 en Mars : prix stabilisés à Paris depuis presque un an
- 19/04/2006
L'indicateur du prix au m2 à Paris intra-muros, publié par les Echos-Laforêt, fait preuve en Mars d'une grande stabilité par rapport à Février (5708 € du m2). Sur un an, les prix sont restés très stables à l'intérieur d'un couloir entre 5300 et 5800 € du m2, à "l'accident" près de décembre (4849 € du m2, non significatif).

Prices stabilising in Paris, between €5300 and €5800 per squ.meter on average year-on-year, with an "accident" at €4849 in December. Rest of article speaks of offers being withdrawn increasing and number of FTBs in transactions decreasing.

For cross-EU numbers and stats, there ya go: Report prepared by the FR National Bank for real estate market comparsion purposes (pdf)

Provides useful insight because compares same data for old world and new world.
* check page 4 - annual variation in % of price per sq.meter for old dwellings (as in: not newly-built)
* check page 5 - capacity to buy for the average houselhold (indicia of 100 in tables is the average over the period of observation)
* check page 14 - relative yield of rental investment, in % (0 is break even)
* check page 15 - actual rent variation (dotted line) compared to that expected by investors (solid line), in %

in the graphs: Royaume Uni = UK, Etats-Unis = US, Pays Bas = Netherlands, Espagne = Spain, Allemagne = Germany. Funnily enough, France = France.

jobless

From the Indo today.......



House prices up by 14pc

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Average home likely to break the €400,000 barrier forfirst time



AVERAGE house prices in Ireland are set to break the €400,000 barrier for the first time.

Prices across the country grew by 14pc in the past 12 months, adding €45,000 to make a new average price of €365,000.

It is estimated prices will grow by a further 10pc in the next year, bringing the cost of a home to €401,500.

Homes in the capital are now almost two-and-a-half times more expensive than the same property in the south-west of Ireland.

The quarterly report from Daft.ie has also shown that rents have increased by 4.6pc over the 12-month period to April 2006. However, this is still 8.5pc lower than they were in 2002.

Commenting on the price increases, David Duffy of the ESRI said the upward growth will continue.

It was also pointed out that the figures are based on asking prices, with the sale price likely to be even higher than those recorded.

"The view has been that prices won't grow at quite the rate in the next 12 months, but we're still talking of growth in the region of 10pc," said Mr Duffy.

"The rise in interest rates will have some impact on affordability which will hit price growth.

"Strong supply this year will also go some way to meeting demand."

He pointed to strong employment, inward migration and strong consumer confidence as the underlying reasons for the continuing boom. Prices grew by 5.5pc between January and April this year, and Mr Duffy believes the SSIAs will have an impact on prices in the near future.

"We really don't know what the SSIA effect will be, but all of the surveys suggest some of it is going into property," he added.

He believes the market will experience "very strong growth" throughout 2006 with no sign of a fall in prices.

The average three bed-house on the northside of the capital now costs €441,999 compared to €456,638 on the southside. A further 10pc hike would bring the prices to €486,198 and €502,301 respectively.

Expensive

Prices are most expensive in south county Dublin at €637,175, compared to €335,951 in west Dublin.

The same type of home in the commuter towns costs €411,531 compared to €325,577 in Cork and €233,426 in Connaught and Ulster.

Owners of a three-bed house in Dublin city centre could expect to get rental income of €1,900 per month compared to €1,171 in commuter towns such as Celbridge, Naas and Maynooth.

Other findings from the report show that Clonakilty is the most expensive town in Munster with an average asking price of €350,000. This compares to less than €200,000 in Newcastle West.

Wicklow saw the biggest gain, with prices up 21pc compared to last year.

FillSpectre

jobless wrote:

Owners of a three-bed house in Dublin city centre could expect to get rental income of €1,900 per month compared to €1,171 in commuter towns such as Celbridge, Naas and Maynooth.

This is where I don't trust the papers. How many 3 bed houses are there in the city centre (which is inside the canals)? I did a Daft search and found one. THe article suggests this is normal and it isn't.
You can rent 3 bed houses for €1200k very easily around Dublin.

The_Conductor

FillSpectre wrote:

This is where I don't trust the papers. How many 3 bed houses are there in the city centre (which is inside the canals)? I did a Daft search and found one. THe article suggests this is normal and it isn't.
You can rent 3 bed houses for €1200k very easily around Dublin.

Not very easily- you would be very limited in which area you would manage to rent a 3 bed at 1200 per month. I do not believe that 1900 is realistic- but 1200 would be extremely optimistic for quite a lot of areas.