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Housing bubble starting to pop?

SimpleSam06

Here in Galway, one of the most expensive places to buy property in Ireland, there are still a lot of real estate agents trying to move 3 bedroom houses at €450,000 or so, but Remax property about a week ago was advertising three bedroom houses in good areas for €320,000, or in a couple of cases, €250,000.

I've been looking at property around town for the last six months, and I have to say this is the first time I have seen property anywhere under the 300k mark. Now with that said, there are still places going for looney tunes money, a two bedroom penthouse apartment for 1.4 million last week, but thats getting pretty rare (probably why it made the news).

Can this be the beginning of the end of the property bubble? And does this mean FTB actually have a chance over the coming year? Should first timers wait until the prices bottom out?

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gearoidmm

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chump

I'd be inclined to think we should leave everything as it is. To change the rules now is unfair. The market will eventually reach an equilibrium, and whatever shape that takes - so be it

:eek:

lomb

anyone here think that raising stamp duty to 15 or 17% across the board even for ftbs is the solution?
banks cant lend for it and people will have to save for it. will bring in more revenue meaning they can cut employers prsi which is needed to be cut from 10% to keep multinational jobs in ireland.
i cant see any other solution, the one and only lever the interest rate lever is not in the hands of the prudent central bank.

D'Peoples Voice

SkepticOne wrote:

No party looking for votes is going to deliberately take action to lower house prices.

Agreed, which is why I believe the media should take a more critical view on politicians suggestions at fixing house prices.
The fact is, and the figures prove this point, the removal of the FTB grant reduced the growth rate of house prices. Yet the media were skeptical of the Government when they did it.
When the Government reduced stamp duty for FTB, they KNEW it was akin to giving FTB thouands of euro into the hands of FTB to outbid one another, so they KNEW it would increase the growth in house prices. Yet the media complimented the government.
The fact is, the media should be shouting at parties like fine gael for ever contemplating reducing stamp duty further, the fact that they don't, encourages politicians to come up with half-arsed suggestions like reducing stamp, because they know they will get positive media coverage and the electorate don't understand the consequences.

SkepticOne wrote:

If you really wanted to collapse the market quickly (this is totally politically unrealistic, of course) then a pre-announced raise in capital gains tax six months in the future would cause a dumping of investment properties onto the market as speculators try to take profit prior to rise.

I can see this coming back in, first on development land, then houses. It will be phased in and if you think of it, it's ingenius. First you get all the stamp when they buy the house, then you get the higher rate of CGT when they sell.

SkepticOne wrote:

I think this bubble is going to burst naturally without intervention in the next few years. Whatever political party holding power when that happens is going to be in trouble. If I was running FF, I would be looking to have the opposition in power for the crash itself.

I think you'll find the government will blame the lack of control over monetary policy as the cause, and say they did all they could:mad: Of course they can say that the Bacon report believed increased supply was the answer, but the report also said that you have to handicap investors at the same time, something our government refuses to take serious in my opinion!

redspider

TheBigLebowski wrote:

That's assuming there is a bubble. A bubble is only a bubble if it bursts, otherwise it's just a steep rise.

Various labels can be put on market price changes, but if there are significant price increases, and if that is followed by many years of price stagnation, it leaves some purchasers of those assets losing money. It doesnt have to be a drop in nominal values/prices, all that is required is a drop in real (inflation adjusted) values. If prices drop at all in those terms, it is a bubble of sorts. No-one is expected a house price crash, not unless everyone wants to leave the country.

The price graph of property prices in Dublin city/county, adjusted for inflation, is an interesting graph I expect. Does any one have it for the last 50 years, and compare it with effective salary changes in the same timeframe?

The trend is that people have been willing to pay more and more of their salaries for loans on assets, and all goes well in a market where those assets are rapidly increasing in price. In a way, its analagous to a pyramid scheme, everyone keeps making money in the early days of the scheme. But now and you make money, keep buying, you keep making money, as long as there are willing buyers.

At some point people will be able to go no further in what they are willing to pay, especially if there is no guarantee of a price increase. People in Ireland today are buying property 'blind' as it will go up in value - guaranteed. Thats a superheated market. The bubble in effect is being blown up/fuelled if you will, by the confidence of the purchasers. That confidence is remaining so the growth is remaining.

As Bertie said, people who didnt buy last year were fools! An extension of that is that people who didnt buy 10x properties last year and rent them out, hoping to make their money in capital gains, were also fools. But like a pyramid scheme, it cant go on for ever. The whole country cant buy 10x properties each and rent them out, it would take a lot of Poles, Lithuanians and others to sustain that.

There is no such thing as a property-only economy, as much as we like to think there is. It just doesnt work. But Ireland's economy is now at 25% involved in property, which is well above any long term standard norms ever since we humans started to build straw huts in the savannah.

We dont know where we are going, all we can do is forecast, as house prices are a direct consequence of buyers confidence, not on actual brick/mortar value. Like in the dot-com days, people threw out the economic guidelines learnt from the past and said we were in a new paradigm. Well, that didnt pan out for most. It remains to be seen what happens - as no-one really knows!

redspider

SimpleSam06

CiaranC wrote:

You tell us, as you seem to know everything about the market. (Even though your anecdotal evidence of a collapse already starting flies in the face of the BoI report yesterday, but we'll ignore that, shall we?) When and how fast is this change going to happen?

So you're going to tell me that the single group that stands to make by far the most money out of an ongoing bubble, the bank, released a report saying all would be just fine, and you believed it? Theres a reason they say lies, damned lies, and statistics.

If it looks like a duck and quacks like a duck, well...

I won't be making any solid predictions as to when and how fast, I'm not a respected financial institution.

If I was a gambling man I'd say early next year at the latest, and slow starting, then accelerating.

Pa ElGrande

lomb wrote:

will we have another 20 % increase in property next year as well as this?
its looking like it.
one question why have the banks not passed the interest rate rises to customers. they are still around 4%, we need to see 5-6% to stabilise things. people have too much money at the moment and too much confidence.

Not with soaring costs

Killala Precision Components in Co Mayo is a fairly typical small Irish business which is being hammered by rising fuel and energy costs.
The precision engineering sub-contractor employs 40 people and is aiming for turnover of €3m in the current year.
General manager Deirdre Irwin is battling rising energy costs year after year.
"In the 12 months between July 2005 and June 2006 our ESB bills went from €39,000 to €46,000 - an increase of 18pc," Ms Irwin says. A similar increase is on the cards from January 1 next.

'Our ESB bills went from €39,000 to €46,000'
http://www.unison.ie/business/stories.php3?ca=80&si=1660325 [free registration required]

It's going to be a tough winter for Irish business as fuel costs and the price of oil-based raw materials go through the roof.
ESB is expected to seek a price increase of up to 20pc which will come into effect on January 1 next. That's on top of increases in each of the last three years as follows: 10.27pc in 2004; 3.5pc in 2005 and 5.2pc in 2006.
<snip>
Bord Gáis has been provisionally allowed increase its prices by 34pc with effect from October 1 next - the onset of the winter heating period in this country. That's on top of a 25.2pc increase in 2005 and a 16pc rise in 2004.

OUR BURNING ISSUES . . .
http://www.unison.ie/business/stories.php3?ca=80&si=1660349 [free registration required]

DELL confirmed yesterday that some of the 3,000 workers in its Limerick plant have been asked if they would be prepared to move to a new computer manufacturing facility they want to build in Poland.

Dell’s Limerick workers needed for Polish plant
http://www.irishexaminer.com/irishexaminer/pages/story.aspx-qqqg=business-qqqm=business-qqqa=business-qqqid=9628-qqqx=1.asp

I don't see any costs for business or consumers coming down next year, either they have to pass on costs, absorb them and reduce employment or go out of business. There are several multi-nationals in this country implementing migration plans to Eastern Europe, some will close outright, others will cap or cutback any expansion plans.
Mortage repayments are not going down either (unless fixed) and even more introductory offers are going to end. Oil has been over $70 for a long time and shows no sign of reducing substantially. Public sector wage inflation and numbers are increasing - this increases the cost of transport and medical care still further. It should also be instructive that Tesco are no longer advertising "permanently low prices" like they did over a year ago, so much for repeal of the groceries order

.
The squeeze on everybody's margins is going to put the brakes on general house price increases.
I would go so far as to say if what Dan McLaughlin (Bank of Ireland) is predicting comes true (3% growth) then we are most likely to be heading into a period of stagflation, where economic growth stagnates, and inflation increases above growth, along with unemployment and taxes to meet the shortfall in government revenue.

SkepticOne

lomb wrote:

will we have another 20 % increase in property next year as well as this?
its looking like it.

If it is a bubble then it could easily go up by this amount. In a bubble all rationality goes out the window. Nobody knows though because bubble, by their nature, are unpredictable.

whizzbang

lomb wrote:

one question why have the banks not passed the interest rate rises to customers.

waiting until they have sold off their own land?

lomb

will we have another 20 % increase in property next year as well as this?
its looking like it.
one question why have the banks not passed the interest rate rises to customers. they are still around 4%, we need to see 5-6% to stabilise things. people have too much money at the moment and too much confidence.

CiaranC

SimpleSam06 wrote:

How fast do you think that can change?

You tell us, as you seem to know everything about the market. (Even though your anecdotal evidence of a collapse already starting flies in the face of the BoI report yesterday, but we'll ignore that, shall we?) When and how fast is this change going to happen?

SimpleSam06

Begrudgers and jealousy, I hear? Ten to fifteen times the national median income, thats the price of a house. Soft landing my muscular buttocks, I was watching a world war two documentary last night, and the sound of the Stukas dive bombing reminded me of the Irish property market. All that property has a high value in one place and one place only, and thats in peoples' brains. How fast do you think that can change? Anyway I found this rather good article / news / blog thing complete with caustic commentary on the BoI release...

Dr Dan McLaughlin, well known economist, said he was increasing his predictions for house price increases for 2006 up to 12%, saying that wage increases, good employment levels, and a rapid increase in population levels fuelled this increase. Dr McLaughlin however fails to account for the fact that most wage increases were in the public sector, not the far larger private sector, and that a good deal of population growth can be attributed to transient immigrant population, currently estimated to comprise 10% of the population, or 400,000 people.

Sponge Bob

The new econonmy again ...begad

Cantab.

redspider wrote:

The staggering House Price growth in this country hasn't halted and reversed as yet. Its as fast as it ever was, if not ever:
http://www.rte.ie/business/2006/0731/houses2.html

But there are a couple of figures out today which give a dimension as to how big the 'frenzy' has become.

According to this:
http://www.rte.ie/business/2006/0731/houses.html
90,000 homes will be built this year, up more than 10% on last year and also another record year.

Last year (2005), 108,000 mortgages were paid out (a record) and a record amount was taken out on loan, 21.5 billion. The forecast for 2006 is a rise to 120,000 mortgages resulting in total new mortgage lending of €26.5 billion. Thats a 5 billion 23% increase.

Our economy is about (edit: 136) billion pa in GNP terms. So, nearly a fifth of the economy iis propped up by mortgages (residential) loans, and more is propped up by other credit facilities not to mention commercial mortgages. So the country/people are benefitting now with cash that is borrowed and will have to be paid back!

Although this country may be in a property asset frenzy, less and less of it is actually paid off (percentage wise) and our loan ration is getting larger and larger on a per capita basis. And as our population ages and the demographic trend swings to an aging population that must be supported, the 'game' may change.

But would we live anywhere else ????
http://www.economist.com/theworldin/international/displayStory.cfm?story_id=3372495&d=2005

And also as mentioned, Ireland isnt the only place where property prices have increased substantially. If you look at in global terms and over a long time, property prices have been increasing ever since the end of the 2nd world war. Looking back even further, 1850 was not a good time to buy, or was it 1820, as property prices remained stagnant and dropped in Western Europe for most of 80 years during a long period of deflation. Global deflation may happen again at some point, although as the planet is 'enjoying' a population growth boom, it may not happen.

They may not be making land anymore, as is oft quoted, although in Dubai and in Holland that is of course possible, but the property on that land and the land itself is not always a sure fire bet for investment, no matter what everybody is saying in Ireland and down the pub or the Taoiseach. However, the markets in short cycles (5-10 years) move in certain ways, as they do in 50-100 year cycles.

But we are in uncharted territory. Whilst we can look at the lessons from the past, and from other countries, each time and place and economic situation, each day even, is unique, and what we all do as a society/economy which has a 'mind of its own', is unknown.

Signs are not looking good though, and there is a lot of blind optimism out there, and people buying, and borrowing, and lending, etc .... ie: frenzy ! All we can do is sit and watch and observe whilst 3-bed semi-D's that cost 150k to build (in terms of resources) are selling for 1 million in Dublin, and the same house if built say in the middle of a mountain a bog or a field somewhere would only cost 160k. That is a sign of a land/property bubble if ever there was one, an imbalance.

redspider

Yeah, we've entered a new paradigm of economics...

seamus

Of course there's a property bubble - most of the prices are built upon borrowed capital, and the value of the property is mostly based upon what people think it's worth.

For anyone who points to a record year as proof of no slowdown, remember that it must peak before it begins to drop. Records prices this year doesn't mean continued growth next year. However I do believe that it looks much more likely for there to be a slow drop, probably down to a more reasonable growth level of 3% - 5%.

Pa ElGrande

Nonetheless, we also retain our view that the market will slow in price terms in the latter part of the year and in a more pronounced form in 2007, as affordability deteriorates in the wake of higher interest rates - we still expect the ECB repo rate to rise to 3.5% by March 2007. The cost of servicing a new mortgage on our affordability model will then rise to over 37% of average earnings, from 31.5% in 2005 and 35% this year. The impact of higher interest rates can be softened to some degree by extending the loan term, but eventually the ECB’s monetary tightening will bite, and so we reiterate our price forecast for 2007, which envisages prices rising by 3% over the course of the year.

The Irish Property Review A Quarterly Analysis – August 2006
http://www.bankofireland.ie/html/gws/includes/corporate/pdfs/global_markets/review_aug06.pdf

Think everyone's missed the big story in this report he's predicting growth will slow from 12% to 3%. And whats this extending the term loan? Intergenerational mortgages in the pipeline perhaps! :eek:
And what about the CPI currently pegged at 3.9%, I don't see that measure reducing next year since energy prices are also increasing later this year. The investors are not going to like this one bit since the value of their investment is decreasing and the rental yields are already poor.

Credit card debt is a very small part of borrowing in Ireland, accounting for some €2.3 billion out of total borrowings of €289 bio but it is worth watching for any indication of emerging difficulties. In this regard the acceleration in credit card debt from a 17.6 per cent pace of increase in May to 18.0 per cent in June is of some significance in part because it represents the fastest pace of increase since August 2003. This figure reflects the gap between new borrowings and repayments. Both of these elements can be very volatile from month to month. However, it is notable that the increase in credit card debt in June reflects the fact that while new borrowings and repayments both increased at a slower pace in June than in May, the slowdown in credit card payments was greater than the easing in new borrowing.

Strong Growth and Stubborn Inflation point to Higher Borrowing Costs - - Austin Hughes, IIB Bank
http://www.finfacts.com/irelandbusinessnews/publish/article_10006783.shtml

Above every silver lining is a dark cloud.

SkepticOne

faceman wrote:

I totally agree dude, but cue the amount of pessimists who will roll in their points about bubbles bursting, holding grudges against property owners. :rolleyes:

That's a terribly cynical point of view.

SkepticOne

TheBigLebowski wrote:

That's assuming there is a bubble. A bubble is only a bubble if it bursts, otherwise it's just a steep rise. Of which there have been plenty in the world that turned out not to be a bubble.

I agree with this. If it is not a bubble then it won't burst. However, the evidence suggests that the current rise is unsupported by fundamentals and is being driven by unsound speculative investment and therefore will burst. The question being asked here is whether the pop is starting to pop now or sometime later. The optimistic view would be that the burst will occur sooner rather than later.

faceman

TheBigLebowski wrote:

That's assuming there is a bubble. A bubble is only a bubble if it bursts, otherwise it's just a steep rise. Of which there have been plenty in the world that turned out not to be a bubble.

I totally agree dude, but cue the amount of pessimists who will roll in their points about bubbles bursting, holding grudges against property owners. :rolleyes:

TheBigLebowski

SkepticOne wrote:

I think this bubble is going going to burst naturally without intervention in the next few years.

That's assuming there is a bubble. A bubble is only a bubble if it bursts, otherwise it's just a steep rise. Of which there have been plenty in the world that turned out not to be a bubble.

SkepticOne

No party looking for votes is going to deliberately take action to lower house prices. An attempt at stabilisation is the most you could expect, imo, but I think the market has gone beyond the point where this is possible due to the numbers of people in the market for speculative reasons so I don't think this will happen either.

If you really wanted to collapse the market quickly (this is totally politically unrealistic, of course) then a pre-announced raise in capital gains tax six months in the future would cause a dumping of investment properties onto the market as speculators try to take profit prior to rise.

I think this bubble is going going to burst naturally without intervention in the next few years. Whatever political party holding power when that happens is going to be in trouble. If I was running FF, I would be looking to have the opposition in power for the crash itself.

redspider

The staggering House Price growth in this country hasn't halted and reversed as yet. Its as fast as it ever was, if not ever:
http://www.rte.ie/business/2006/0731/houses2.html

But there are a couple of figures out today which give a dimension as to how big the 'frenzy' has become.

According to this:
http://www.rte.ie/business/2006/0731/houses.html
90,000 homes will be built this year, up more than 10% on last year and also another record year.

Last year (2005), 108,000 mortgages were paid out (a record) and a record amount was taken out on loan, 21.5 billion. The forecast for 2006 is a rise to 120,000 mortgages resulting in total new mortgage lending of €26.5 billion. Thats a 5 billion 23% increase.

Our economy is about (edit: 136) billion pa in GNP terms. So, nearly a fifth of the economy iis propped up by mortgages (residential) loans, and more is propped up by other credit facilities not to mention commercial mortgages. So the country/people are benefitting now with cash that is borrowed and will have to be paid back!

Although this country may be in a property asset frenzy, less and less of it is actually paid off (percentage wise) and our loan ration is getting larger and larger on a per capita basis. And as our population ages and the demographic trend swings to an aging population that must be supported, the 'game' may change.

But would we live anywhere else ????
http://www.economist.com/theworldin/international/displayStory.cfm?story_id=3372495&d=2005

And also as mentioned, Ireland isnt the only place where property prices have increased substantially. If you look at in global terms and over a long time, property prices have been increasing ever since the end of the 2nd world war. Looking back even further, 1850 was not a good time to buy, or was it 1820, as property prices remained stagnant and dropped in Western Europe for most of 80 years during a long period of deflation. Global deflation may happen again at some point, although as the planet is 'enjoying' a population growth boom, it may not happen.

They may not be making land anymore, as is oft quoted, although in Dubai and in Holland that is of course possible, but the property on that land and the land itself is not always a sure fire bet for investment, no matter what everybody is saying in Ireland and down the pub or the Taoiseach. However, the markets in short cycles (5-10 years) move in certain ways, as they do in 50-100 year cycles.

But we are in uncharted territory. Whilst we can look at the lessons from the past, and from other countries, each time and place and economic situation, each day even, is unique, and what we all do as a society/economy which has a 'mind of its own', is unknown.

Signs are not looking good though, and there is a lot of blind optimism out there, and people buying, and borrowing, and lending, etc .... ie: frenzy ! All we can do is sit and watch and observe whilst 3-bed semi-D's that cost 150k to build (in terms of resources) are selling for 1 million in Dublin, and the same house if built say in the middle of a mountain a bog or a field somewhere would only cost 160k. That is a sign of a land/property bubble if ever there was one, an imbalance.

redspider

D'Peoples Voice

SimpleSam06 wrote:

Hrm. You first point doesn't follow on from your second point. If investors are forced out of the market, thats 40% of last year's demand gone into thin air.

That's true, but there are an incredible ampount of first time buyers just waiting in the wings should there be any fall in price. Hence any fall will be cushioned!

ronbyrne2005 wrote:

triple stamp duty for investors and watch as prices fall.

I know you're being flippant but even such a crazy suggestion might not necessarily work. You see if stamp duty, which is now 9% for investors, was tripled to say 27% of 30%, this may seem off-putting initially BUT it all depends on the encouragement given to first time buyers. Assume you have 9 FTBs lookin at a house. Now assume Fine Gael (as Cllr Richard Daly says) abolish all stamp duty for first time buyers on properties less than EUR 400k, each of these 9 FTB have 3% x EUR 400k more in their pockets now becos they have no stamp duty. Hence each of them will be willing to up their Max bid by this amt. The net effect is that the house will be sold at a far higher price. for an investor who knows how this works, he can bet that this shock to the system will lead to prices rising higher year by year for years to come. The investor will take the punt on paying 30% extra now on stamp in the hope of earning 10% cap appreciation over 3-4yrs to make a profit.
But yet I believe you are along the right road, and that is, don't give FTBs money, else they will only outbid each other with the extra cash, the same way as they did with the first time buyers grant. Instead take money away from investors by introducing CGT of 60% fpr houses sold within 2yrs of purchase, 40% within 5 yrds, and 20% thereafter. This will get rid of/reduce the process of investors flipping houses.

micmclo wrote:

Political suicide and not going to happen

Spot on.
you see fine gael like Fianna Fail before them are trying to burn the candle at both ends. they want to benefit first time buyers while NOT harming investors as they depend on votes from both!

Afuera

Sizzler wrote:

Far from it

http://www.breakingnews.ie/2006/07/31/story270134.html

Same story, different spin:
http://home.eircom.net/content/irelandcom/breaking/8580522?view=Eircomnet

Sizzler

Far from it

http://www.breakingnews.ie/2006/07/31/story270134.html

Cantab.

Pa ElGrande wrote:

Yup, it sure does - lots more bills, stress and no scope for downtime.
It does have its pluses though

There is plenty of land, but how much of it is released for development each year?
How much is serviced?
How much housing is built near where people want to live (Near to work and schools)
As you already pointed out Article 17 allows people to buy property, the government can't just seize the land bought by speculators years ago to build cheap housing. This is part of the price we pay for the brown paper bag culture.

The people reponsible for this mess are your parents and grandparents generation, they are the ones who benefit when you take on increasing debt and transfer the money to them. You will hear them express superficial "concern" about the huge mortgages young people take on these days, and you will get lots of encouragement from them to get on the ladder "sure it will always go up, look at me".

You may even get a deposit from them (How did they manage to save that money?), to compete against others in the same boat as you, driving up the prices further. You also have to compete against flippers, speculators (see investors) and the tactics of underhanded estate agents (the phantom bidder).

The housing business has come to exist not for the buyer and seller, but for itself. The dream of home ownership has become hollowed out by the people who run the business of houses: Agents, builders, banks, and finally, even us. We, ultimately, put down the money we don’t have, to buy the pokey houses we can’t afford.
And that is why we have busts and recessions!

Why don't you just wait for the house fairy to come along and give you a 3 bed house in Rathmines?

Pa ElGrande

SimpleSam06 wrote:

How hard would it be to free up 1% more land? God knows they are making enough on VAT and stamp duty... But oh no, we need more civil servants...

not that hard - Dublin area rapidly running out of water.
Then there are the NIMBY's such as an Taisce and the type of people who would even object to kids building sand castles on the beach. Thanks to them developers can't build large family sized apartments because of height restrictions and are forced to fit as many apartments in a limited area as possible to make a profit.

SimpleSam06 wrote:

Actually they can...
Eminent domain (US), compulsory purchase (United Kingdom, New Zealand, Republic of Ireland), compulsory acquisition (Australia) or expropriation (Canada, South Africa) in common law legal systems is the lawful power of the state to expropriate private property without the owner's consent, either for its own use or on behalf of a third party.

Yes they could, and the government (ultimately you the taxpayer) have to pay market rates.

SimpleSam06 wrote:

Blaming FTBs for the state of the market may be slightly justifiable, but I wouldn't go so far as to say that a large amount of the blame lies with them.

Fair point, but they are the ones paying the mortgage, they should not be blind to prudent financial management and risk assesment. I had a rather alarming conversation with a woman recently who is paying an IO mortage on her apartment, but has no capital repayment plan. Turned out all she was looking at was the low monthly repayments, I don't believe the broker explained the capital repayment part, or maybe he did and she chose to believe what she wanted.

SimpleSam06 wrote:

Basically, I think tripling stamp duty for investors and specualtors is the best idea I have heard all year. The bank problem will take care of itself with rising interest rates. If that got put in place along with a planning permission overhaul, we might see some changes for the better.

No need to triple the stamp duty, A lot of these so called investors are going to be taking a bath over the next few years. As you say, the bank interest rates rising will reduce the amount of money people can borrow, once this happens house prices will stop rising and start falling. With no more capital appreciation, the speculators will be forced to jump to preserve whats left of their capital.

SimpleSam06

Pa ElGrande wrote:

There is plenty of land, but how much of it is released for development each year?
How much is serviced?
How much housing is built near where people want to live (Near to work and schools)

How hard would it be to free up 1% more land? God knows they are making enough on VAT and stamp duty... But oh no, we need more civil servants...

Pa ElGrande wrote:

As you already pointed out Article 17 allows people to buy property, the government can't just seize the land bought by speculators years ago to build cheap housing.

Actually they can...
Eminent domain (US), compulsory purchase (United Kingdom, New Zealand, Republic of Ireland), compulsory acquisition (Australia) or expropriation (Canada, South Africa) in common law legal systems is the lawful power of the state to expropriate private property without the owner's consent, either for its own use or on behalf of a third party.

Pa ElGrande wrote:

The people reponsible for this mess are your parents and grandparents generation, they are the ones who benefit when you take on increasing debt and transfer the money to them.

I agree completely, but I would qualify that by saying that the banks and large developers are the biggest villains of the piece. I mean they stand to make the most, seconded only by the government, and they represent a focused source of action in the market. Speculators and investors come next, although they are a more diffuse source of action.

Pa ElGrande wrote:

The housing business has come to exist not buyer and seller, but for itself. The dream of homeownership has become hollowed out by the people who run the business of houses: builders, banks, and finally, even us. We, ultimately, who put down the money we don’t have to buy the pokey houses we can’t afford.
And that is why we have busts and recessions.

Blaming FTBs for the state of the market may be slightly justifiable, but I wouldn't go so far as to say that a large amount of the blame lies with them. Basically, I think tripling stamp duty for investors and specualtors is the best idea I have heard all year. The bank problem will take care of itself with rising interest rates. If that got put in place along with a planning permission overhaul, we might see some changes for the better.

Pa ElGrande

SimpleSam06 wrote:

However the minute you take on more responsibilities, like a family, that picture changes drastically.

Yup, it sure does - lots more bills, stress and no scope for downtime.
It does have its pluses though

There is plenty of land, but how much of it is released for development each year?
How much is serviced?
How much housing is built near where people want to live (Near to work and schools)
As you already pointed out Article 17 allows people to buy property, the government can't just seize the land bought by speculators years ago to build cheap housing. This is part of the price we pay for the brown paper bag culture.

The people reponsible for this mess are your parents and grandparents generation, they are the ones who benefit when you take on increasing debt and transfer the money to them. You will hear them express superficial "concern" about the huge mortgages young people take on these days, and you will get lots of encouragement from them to get on the ladder "sure it will always go up, look at me".

You may even get a deposit from them (How did they manage to save that money?), to compete against others in the same boat as you, driving up the prices further. You also have to compete against flippers, speculators (see investors) and the tactics of underhanded estate agents (the phantom bidder).

The housing business has come to exist not for the buyer and seller, but for itself. The dream of home ownership has become hollowed out by the people who run the business of houses: Agents, builders, banks, and finally, even us. We, ultimately, put down the money we don’t have, to buy the pokey houses we can’t afford.
And that is why we have busts and recessions!

SimpleSam06

Pa ElGrande wrote:

Property does not refer to housing in the context of Article 17.

Oh really, I don't recall seeing an "except for housing" clause written under that. I'm not going to get into a debate about the declaration of human rights, however. Although I could, particularily regarding the word "resident" and its meaning in international law.

Pa ElGrande wrote:

The government is a representation of the people of this country's interests. The majority are very happy to see property prices rise as long as they are on the ladder and the government supports this.

Who said the majority are on the ladder? And even if it is, is it right to disenfranchise 20% of the people to suit the other 80%? I believe they tried that not too long ago in the north, that went well. Not to mention those figures will reverse within a generation.

Edit: Number of private households: 1,287,958. Total number of registered voters: 3,077,726.

Pa ElGrande wrote:

At the end of the day, you can only eat three meals a day, wear one set of trousers at a time, sleep in one bed, you need to interact with the community and provision for your dependants and the future. Does it matter whether you own a house or rent as long as the goals in article 25 can be achieved?

Survival is for animals. I think we can do a little better than that. If you happen to be a student, young single professional, or transient immigrant, I am certain that renting would be a fabulous idea. However the minute you take on more responsibilities, like a family, that picture changes drastically. Also, and I'm going to repeat this again, the price boom is artificial. There is only 4 million people in this country, we have a gigantic amount of land sitting there (approximately 4 percent of land is covered by urban development).

Christ, I have offices in cities with three times the population of this nation. Most people don't feel like spending their entire lives in penury just to fill the coffers of the banks, and the arse pockets of weekend speculators.