Property Market 2020

schmittel wrote: »

Long term I have no idea. In real terms I suspect it is perfectly possible.

I was just pointing out that your chart actually showed a downward trend and the ftse is at 1998 levels.

and 6 months ago it was at 50% more than that...the point is that, over time, it goes up. It always has and it always will.
It may not go up and down to suit your timing, but as I wrote in my previous post, I'd rather get it wrong by buying than by not buying.

GreeBo wrote: »

If they fall off a cliff, the worst case scenario is that you have a house to live in, that presumably you liked and is in a suitable location, paying a mortgage that you were happy to pay at the time.

If you dont buy then the worst case scenario is that house prices increase beyond what you can afford and your ability to save is diminished by increasing rents

I know which of the above I consider to be worse.
FWIW I bought a house in 2008, a modest 3 bed semi. It dropped in value, just like everywhere else, but it didnt matter as I could still afford the mortgage, it was still a fine place to live. 10 years later I sold it and made a profit.

Nothing can help you if you buy the wrong house, sure you might get lucky and get caught up in a general up-turn, but thats not a strategy, thats sheer luck.
A desirable house is a desirable house, if you panicked and spent 400K on a semi-d in the back arse of nowhere, that was never going to be a desirable house then thats on you.

Job losses, divorce and being saddled with debt double the value of an asset you can't sell are the worst case scenarios.

Just because your own personal circumstances meant you could ride out 10 years of negative equity doesn't mean everyone's will.

People can't live in an index linked house that rides out the trend. They buy houses they can afford, some will hope to trade up to a bigger house. 10+ years stuck because you bought before a major crash is a big deal, whether you can wrap your head around it or not.

There are plenty of people in Ireland in negative equity for 13 and 14 years, and who more than likely will be for the next 13 or 14 years too, if not forever.

addaword wrote: »

There are plenty of people in Ireland in negative equity for 13 and 14 years, and who more than likely will be for the next 13 or 14 years too, if not forever.

Hope many of them bought a stupid house that was never a sound investment though?

GreeBo wrote: »

Hope many of them bought a stupid house that was never a sound investment though?

At the time practically everyone thought it was a sound investment.

Hindsight is wonderful.

In 3 years people will see it was mad to buy in May or summer 2020.

addaword wrote: »

At the time practically everyone thought it was a sound investment.

Hindsight is wonderful.

In 3 years people will see it was mad to buy in May or summer 2020.

I don't think anyone thought buying a semi d in naas for 500k was a sound investment, it was panic buying. It was never going to be a long term home or a desirable location likely to have long term demand.

schmittel wrote: »

If your focus is too narrow you'll just end up seeing what you want to see.

Given that the highs in 19 are lower than the highs in 07 that chart is showing a downward trend.

And the FTSE 100 today is at the same level it was in 1998.

The FTSE has not increased much because a lot of gains are paid out as dividends. Dividend yields are higher than the US.

Bass Reeves wrote: »

It's interesting to see the amount of people cheering on looking for a rehash of 2008-2014. They consider that it will be an opportunity. However in Chinese opportunity and danger are the same word. I remember lads pre 2008 waiting for it to happen, sort the men out from the boys, show who wearing no clothes.

Recession's have to be survived. I have seen two really bad one's in my life. If a third happens I imagine I will get through it as well. But many will not.

Be careful what you wish for. If what some here expect to happen actually takes place, this could turn out like the great depression. I am not sure if what they perceive as an opportunity will not turn out to be very dangerous for them.

Just as an aside about so called expensive houses pre 2008. Many of these were bought with trackers as low as 0.75%above the ECB rate. Unless you bought at the very bottom of the cycle you may not be much better off than some of these people especially if you ended up renting 3-4 years extra waiting to buy. There are still people who did not buy in that period waiting to buy

Recessions are both a necessary and welcome correction to the capital structure. A recession ensures all the misallocation of capital and investments of the boom are flushed out of the system. Companies that are no longer needed or that are inefficient go bankrupt and new companies form. It can be viewed like a forest fire in nature...a clearing of the dead wood so new life can emerge.

Recessions are also great times to set up new businesses as land prices and rent fall which should make labour relatively more valuable by lowering fixed overheads. I’m sure there are many people including small business owners who will look forward to paying cheaper rent. This recession can be viewed as an attempt by the system (and I’m talking the invisible hand here not the perverted global system that we have at the moment) to reallocate resources away from the rentier class who have monopolized the low interest rate era for their own benefit.

This ZIRP and NIRP has led to an increasingly unequal society due to increasing corporate power who not only have preferential access to cheap capital via the primary dealers at the expense of the ordinary saver but also the ability to avoid paying taxes. This has led to the destruction of smaller businesses as their competitive advantage is eroded. Concentration of corporate power is extremely dangerous for the cohesion and path of society...the only real way to turn back the phenomenon of rentier capitalism and to limit global corporatism is with a severe recession.

Unfortunately the over reaction (due to regulatory capture) to the past few recessions by the central planners (ie the banking elite) has over stimulated demand with fiscal and monetary levers. This has made the ordinary person poorer by removing their ability to save and by increasing their tax burden. The elite of course can and do avoid taxes.

All this meddling by the central banks have made this essential restructuring of western capitalism about 30 years overdue. Of course they have not only enriched their banking buddies who are closest to the money trough but they have also made the worlds capital and financial structure extremely fragile and prone to collapse.

Indeed this collapse has been predicted by the Austrian economists in particular Ludwig von Mises. In fact there is compelling evidence that we may now be entering what von Mises called the “crack up boom” which will result in the destruction of the global reserve currency and the foundation of a new monetary system.

addaword wrote: »

In other recessions Irish people could emigrate to USA, UK, Oz wherever. This time that option will not be there. The Irish economy will have to sustain them. Taxes will go up, public sector wages will go down. It is inevitable house prices will crash too.

I’m beginning to think buying a house will be the least of people’s worries. Buying food will be more of a priority.

Villa05 wrote: »

I think that anyone considering buying should wait, one thing that can be nearly guaranteed for the short term is that house prices will not be rising and most likely fall. This gives potential buyers the opportunity to

Improve their financial position
Potentially buy better house or location
See where the land lies in the future and make better informed decisions on the biggest purchase of your lives

Some of the advise on here is crazy stuff

Buy you can strategically default if you don't like it
Buy before you loose your job

The Irish property market is extremely dysfunctional, timing is key in boom bust cycles, you may not buy at the absolute bottom but better to catch a rising tide than a falling knife

Protect yourself and your families from extortionate rents and property prices

I think anyone coming in here looking for advice on whether to buy should not proceed. If someone comes looking for advice here they are not ready to make such a big decision. As you said some crqzy advice here on both sides of argument while some people do try to provide balanced opinions.

schmittel wrote: »

Clearly none of the purchases were a sound investment!

Well thats just not true. I gave my own example where it was a sound investment. But you cant use only the poor decisions to make a judgement.

But there were plenty people who bought decent properties in desirable parts of Dublin in 2007 with 110% mortgages, still deep in negative equity now with prices about 20% shy of what they were then.

When would borrowing 110% of an assets value seem like a good idea?
Can you give an example of such a property?

But on the plus side they've saved a fortune in rent. It's dead money you know. Unlike mortgage interest.

Mortgage interest gets you a house at the end of the term. What does rent get you at the end of the term?

The real winners are the ones who thought "feck that, mortgage interest in negative equity is a lot like dead money, I'll just stop paying it."

Most of them are still living in their houses!

Neither you nor I can do anything about that unfortunately.

schmittel wrote: »

Let me guess, you bought your property 2004 or earlier?

2008