Housing bubble starting to pop?

CiaranC wrote:

Well...that poll does actually show that the majority of those predicting a crash dont own property, doesnt it?

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!

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