Will the bubble burst?

gurramok

In the paper today it said that auctioneering firm Gunne are now selling off their property and financial services plus the 80% of auctioneers who own myhome.ie are selling the website.
They are cashing in their 'chips' while the going is good while saying all along that prices will continuing rising, no logicin that!

Its said by the paper that its an indicator that the market has peaked, hopefully maybe?!

faceman

gurramok wrote:

In the paper today it said that auctioneering firm Gunne are now selling off their property and financial services plus the 80% of auctioneers who own myhome.ie are selling the website

Didnt see that article? u got a link?

Lots of interesting posts in this thread but i guess one thing IS for sure about the housing market... no one has the foggiest what will happen. Economists have been getting it wrong for years, no one can even tell how big the bubble is - and if it is a bubble at all.

at the mo we have full employment, high immigration, more cash to splosh and high housing demand. I guess we will have to wait n see!!

gurramok

It was in evening herald, written by a Dan White, he's actually quite good in his 'theories' on his past performance, which is good for a rag paper

faceman

gurramok wrote:

It was in evening herald

aaah no disrespect dude but i despise the herald!! Not sayin it isnt true but i wudnt be concerned yet.

Victor

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.

Be careful with average industrial wages - the represent all grades form cleaners up to the managing director. I'm also guessing only about 10% of Irish people now work in industry.

lomb

Victor wrote:

Be careful with average industrial wages - the represent all grades form cleaners up to the managing director. I'm also guessing only about 10% of Irish people now work in industry.

good point that. average industrial is probably irrelevent around greater dublin area anyway.

Captain Trips

ambro25 wrote:

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]

Those are very good articles, especially the last two. Thanks for the links!

I was considering a buy to let but the returns are just minimal if any. Some properties I've been watching and know people who own in the developments haven't gone up at all in the past year (one sold for 20 grand less than a similar one in same block 12 months earlier and another 10 grand more, but with stamp duty it's more cash that is gone). It seems like city centre has not moved much at all. Only a few places in Temple Bar are maintaining or increasing value.

Property in wealthy suburbs seems to keep going through the roof like Ranelagh, Blackrock and so on. I just can't see the rental returns on properties that cost over 300,000 in Dublin. E.g., even IFSC, a one bed on market for 317500 yet check in Daft and several similar properties rent for €950, so with stamp duty, you'd be making a steady loss of several hundred every month and be years trying to regain the capital appreciation to equalise the stamp duty. Better to make some low risk stocks or something.

lomb

Captain Trips wrote:

Property in wealthy suburbs seems to keep going through the roof like Ranelagh, Blackrock and so on.

some commercial property offers excellent returns. the trick is picking pivotal properties that are special. renting is then easy at 4.5% and covers the interest. however banks wont lend more than 75% of the collatoral forwarded so u need to be fairly wealthy to play in that pond and in any case its slightly risky due to the fact it might be vacant for a year or more.

residential on d4, d6 and blackrock/foxrock is increasing at 20-25% or more a year, in some cases they have lept 40-80 % imho in the last year for some sought after stuff. even houses here are now going to tender here!!! a process once reserved for development land.
personally i think this reflects the wealth of people at this end and truely does cristalise that the rich are most certainly getting much much richer.

dochasach

FillSpectre wrote:

...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.

Property bubbles are always different here, no matter where "here" is.
http://www.google.ie/search?hl=en&q=boom+property+%22different+here%22&btnG=Search&meta=

There are some similarities between Ireland and these new world colonies. A booming economy, net immigration, expectation of low density home ownership, historically low interest rates, free (more or less) market economy, real estate agents aren't regulated as investment advisors...

As for the differences you pointed out: The oft repeated "biggest polluter" meme obviously refers to current CO2 emissions, since emissions of other pollutants are higher outside of the U.S., and exempt kyoto signatories (China and India) will soon be the highest emissions of CO2, but it is a clever phrase to beat the U.S. with. The U.S. deserves a spanking on energy use. However, the U.S. didn't sign the Kyoto agreement and its greenhouse gas levels rose by 13% from 1990-2003. Ireland did sign the Kyoto agreement, and its greenhouse gas levels rose by 25% over the same period: http://news.nationalgeographic.com/news/2005/07/0705_050705_G8score_2.html
Both countries deserve a good spanking, but which one have you heard about?

As for wealth, Ireland now has the third highest GDP/capita in the world, but the rate of poverty has grown since 1990. The inequity level here is the highest in Europe and is rapidly approaching that of the U.S. http://www.cori.ie/justice/publications/ansoecrev/ase_review05.pdf

Are we really so different that market forces can't work here?

FillSpectre

dochasach

It is like you haven't read the thread and just read the title.

I was talking about housing standards not a property bubble. SO Housing in the USA and Australia aren't the same and non compariable.

There is no certainty there is a bubble here to say there is is speculation.

THe USA is a very differnt country to here and the rest of Europe. It is the biggest pollutor and does not have green movememnt like the EU. IT is the worst now, getting worse and not trying to correct things. It fights wars in order to secure its supply of oil. It doesn't matter what we have done or objective is different.

Relative poverty increases with wealth that is all your report really says and we know that. THe US poverty and Irish poverty aren't even close. We have a social welfare system.

dochasach

FillSpectre wrote:

dochasach

It is like you haven't read the thread and just read the title.

I was talking about housing standards not a property bubble. SO Housing in the USA and Australia aren't the same and non compariable.

The thread is straying quite far from "Will the bubble burst?" isn't it? I already posted my comments about housing standards and even fell for the "We're different because they're evil and we're not" troll (which I'll answer in more detail another day on another forum when I need a good laugh), but let's get back to the topic:

FillSpectre wrote:

There is no certainty there is a bubble here to say there is is speculation.

Does "here to say there is speculation", mean you agree that there is speculation? Good, because speculation is very difficult to deny.

Any time you buy an asset hoping to profit from fluxuations in price rather than dividends (rent collected or rent saved), you are speculating. So landlords who's rent income doesn't cover mortgage interest, taxes and maintainence are speculators. The whole concept of "property ladder" can be speculative, especially when buyers use 90-120% mortgages. In these cases if the value drops, the buyer might pay years of interest and make no recoverable impact on their equity. Over the same period, a renter would also have no equity, but in the current climate he would be better off because he would have lived in a better home. The mortgage debter is paying for roof over his head but he is also paying a premium for expected future value.

Whenever asset values rise rapidly, speculators will come. It doesn't matter whether the asset is European flats, Irish semis, American mansions, or tulips. It doesn't matter whether the initial cause of the rise is psychological or physical. It's human nature. Only taxes and laws (e.g. laws against offshore investment in some Irish farmland) can keep speculators away. Whether or not we can quantify their contribution to demand, speculators are here and you'll only shake them out with tax reform, or a drop in profitability.

As far as whether there is certainly a bubble, I don't think its possible to answer that because what is your definition of a bubble? When 20% of the demand is speculative? When 10% of demand is psychological fear of the missing first rung? The front side of a bubble always looks like a boom, if the back side drops 5%/year for the next 15 years, was it a boom or bubble? Who cares? Any builder caught with an oversupply or owner-occupiers stuck with an upside-down mortage and rising interest rates won't be worrying about whether the cause was a bubble or boom.

FillSpectre

dochasach wrote:

The thread is straying quite far from "Will the bubble burst?" isn't it? I already posted my comments about housing standards and even fell for the "We're different because they're evil and we're not" troll (which I'll answer in more detail another day on another forum when I need a good laugh), but let's get back to the topic:

Tryin reading what you reply to or quote becuse it makes your points just sound like shouting over what everybody is talking about on the wider subject.

dochasach wrote:

Does "here to say there is speculation", mean you agree that there is speculation? Good, because speculation is very difficult to deny.

No and quite obviously so.

dochasach wrote:

As far as whether there is certainly a bubble, I don't think its possible to answer that because what is your definition of a bubble?

Actually the point is that a bubble has a definition and it can only be correctly called a bubble after a burst. It is speculitive to call it a bubble as it relies on knowing the future otherwise.

Add to the disscussion if you can don't bother if you are just going to make up what you want to talk about.

dochasach

FillSpectre wrote:

Tryin reading what you reply to or quote becuse it makes your points just sound like shouting over what everybody is talking about on the wider subject.

I'm sorry, but I did read it. The problem is that the phrase I read, quoted and made the mistake of responding to, doesn't parse into an understandable sentence in any language I'm familiar with:

FillSpectre wrote:

There is no certainty there is a bubble here to say there is is speculation.

FillSpectre wrote:

No and quite obviously so.

The meaning of this sentence may have been obvious to you, but I don't think you should assume that everyone knew what you meant.

FillSpectre wrote:

Actually the point is that a bubble has a definition and it can only be correctly called a bubble after a burst. It is speculitive to call it a bubble as it relies on knowing the future otherwise.

This is the pop culture definition of a bubble. But economists and the ECB see thing differently:
http://www.ecb.int/press/key/date/2005/html/sp050608.en.html

[4] The most usual definition of a bubble used in economic research defines it as the part of asset price movements that is unexplainable based on fundamentals. See Garber (2000).

Notice the word "part." Part of the housing demand here is based on fundamentals, the remainder is a bubble. Just because participants in a bubble can only see it in hindsight doesn't mean it doesn't exist.

Add to the disscussion if you can don't bother if you are just going to make up what you want to talk about.

" "

D'Peoples Voice

canavanbn@hotma wrote: »

Just heard on the radio that inflation has fallen, and this combined with SSIA maturing and news of 100% mortgages..what will this mean for first time buyers?
I'm a young person with a modest income, with around 25,000 saved, just wondering what is likely to happen to prices in the next 12-18 months?

Looks like the 100% mortgages have just becomes harder to obtain.
with many people having left their equity based SSIA in situe(or in rollover products) and suffering badly because of the recent stock exchange turmoil, inflation on the way up, not sure what this means for first time buyers:o

A Random Walk

D'Peoples Voice wrote: »

Looks like the 100% mortgages have just becomes harder to obtain.
with many people having left their equity based SSIA in situe(or in rollover products) and suffering badly because of the recent stock exchange turmoil, inflation on the way up, not sure what this means for first time buyers:o

For a responsible FTB who has saved some money for a deposit this is unambiguously good news. You can no longer be outbid at crazy prices by someone who can't even save a penny yet goes mad with the banks 100% mortgage money. This property price fall/crash is playing out by the book and we will likely see the most serious price falls in 2008/2009 as sources of funding dry up and as investors withdraw from the market.

No-one can predict the future but if I was an FTB with some money for a deposit I would hold off for at least 6 months.