Afuera wrote: Try telling that to the Japanese who bought 15 years ago and are still stuck with property worth less than they paid for it back then! Just because you only remember the times when there has been year-on-year rises doesn't mean it's alway or will always be like this. Check out Irish prices in late 70's early 80's for a different story.
Sizzler wrote: We dont live in Japan son and there is no comparison with their economy and ours nor their lifestyle etc etc
whizzbang wrote: No, we are in a much worse position than the Japanese were
nereid wrote: In that case you are as much up the creek without a paddle as everyone else. Relatively speaking of course. L.
whizzbang wrote: absolutely, but I'm planning for the decline, are you?
Sizzler wrote: Of course theres always going to be growth! Even in the poxy early 90's peoples houses had some sort of point rise....but never double digit!
nereid wrote: Of course I am, what makes you think I amn't? L.
whizzbang wrote: Glad to hear it! Now if we could only get the rest of the country to do the same!
nereid wrote: You seem awfully concerned about everyone else. What makes you think that everyone else isn't doing likewise? I don't recall a question on that on the census. I hope you are not one of those people who spends their time looking at everyone else and forgets to do something for themselves. L.
Sizzler wrote: So stop the nonsense and let people make their own decisions for whats right for them.
Sizzler wrote: LOL. Calm down there son. You are one the people that I referred to earlier thats looking for the pat on the back when and if things hit a brick wall.The longer you keep banging on about it the closer you are to something happening. A bit like me starting a Thread in the politics forum saying "Bertie's term is drawing to a close"....my point being, course it will, you just dont know when. So stop the nonsense and let people make their own decisions for whats right for them.
Taoiseach Bertie Ahern said yesterday higher inflation was a sign of a strengthening economy: "In actual fact the reason it's on the rise is because probably the boom times are getting even more boomer."Economic growth shows little sign of letting uphttp://www.ireland.com/newspaper/front/2006/0714/930304623HM1ECON.html "I mean quite frankly, if you had taken the advice a year ago you would have lost a lot of money. Everybody said we're going to see a huge downturn in 2005 linking into 2006 - they were entirely wrong. "Really we should have an examination into why so many people got it so wrong. My view is there's not a great problem. Really, the bad advice of last year given by so many has maybe made some people make mistakes, that they should have bought last year.No indication of property downturn, says Ahernhttp://www.ireland.com/newspaper/front/2006/0408/3447877711HM1NEWBERT.html
In today's property market, negative equity is quite unusual. However, there's always a risk that property prices could fall. You will be more at risk if you have: fallen behind on your mortgage payments borrowed a large proportion of the property's value increased the size of your mortgage when property values were high taken out other loans using your home as collateral a mortgage with high interest rates Negative equityhttp://england.shelter.org.uk/advice/advice-262.cfm#wipTest-576-1Could Irish owners face a negative equity situation? Sunday, July 08, 2001http://archives.tcm.ie/businesspost/2001/07/08/story578380928.asp
The only thing that we could do is let the state borrow enormously by issuing Irish banking bonds to international investors. This cash could then be given to the crippled banks in the form of a 30-year swap, on the condition that the increased liquidity be squeezed into the system, preventing a credit crunch from taking hold. But who would pay for this? Well, we would, because a special tax would have to be levied initially to pay the repayments of the bonds until the banks' balance sheets recovered. It is a scary prospect and one that the 100 per cent 35-year mortgage brokers or the guys involved in ‘Irish pricing' dare not contemplate. Awhile back I heard one of our most successful bankers musing about national plans, financial war cabinets and credit crunches. And if you know he is worried about the ramifications of Moonie economics, you should be too.How secure will you be when the credit runs out? 03/08/2005http://www.davidmcwilliams.ie/Articles/view.asp?CategoryID=-1&CategoryName=&ArticleID=292
Pa ElGrande wrote: In reality, negative equity will mean nothing to people who have no intention of moving house (i.e. the vast majority of people)
Deleted User wrote: while the apartment blocks rising up everywhere are no where near as bad as the tenements 100years ago I do wonder that in the years of our boom did we really improve our quality of life?? is progress spending a fortune to get a second hand semi or apartment or ex council house. should progress not be bigger better houses more money for ourselves etc
Deleted User wrote: amen to that i have planned for the decline............sold the house took the money off to australia soon. good luck everybody thats how seriously i take this. plus had a hard time shifting the house took six months and a drop in price of 40 grand. my house was not overvalued as three other similar houses nearby sold a few months before ours went on the market and ours was originally put up on the market for the same price. simply no interest in it had to drop the price got out while i could. lets just say it wont crash that it will even out . well i aint takin that risk i have the money now off to oz with me and even if i stay for a year or two and come back and if its levelled off i lost a little if it crashes i saved a lot good luck i hope the greedy people rot in hell
nereid wrote: No one care to comment interview on the business news on RTE this morning with Pat McArdle from Ulster Bank on the extent of inflation figures in the eurozone being lower than expected. Thus the "abnormally" low interest rates would not in fact need to rise as much as was originally expected due to stronger growth figures in said markets. About 21:00 mins into the RealPlayer stream. L.
[David Murphy] For homeowners and particularily those who have bought at record prices rising interest rates are a big issue for the household budget. Over the past months there have been four interest rate increases. Some experts predict there could be four more, but all of that depends on inflation and economic growth in Europe. Over the past few days there's been new information released which is making some economists question how many more interest rate rises are actually in the pipeline. To hear a little bit more we are joined now by Pat McArdle, who is chief economist with Ulster Bank. Good morning Pat, what exactly is the latest information and what does it say?[Pat McArdle] Morning David, Well first of all, if we look to the US rather than Europe, there have been a sucession of weaker numbers, in the US, the engine of the world economy. Emm, focused on growth, jobs, housing and indeed most recently yesterday, the leading indicators which fell for the first time in several years. Moving into Europe, this scene is more mixed, growth figures for the start of this week were stronger than expected, but then subsequently, we got a number of weak figures, industrial production actualy fell which is a key indicator for the European activity, and, indeed yesterday, on inflation which is of course what the European Central Bank focuses on, it came in slightly better that expected at 2.4 per cent instead of 2.5[DM] So what exactly does this mean to the average person who is looking at their mortgage and wondering what the situation's going to be over the coming 12 months or so.[PMc] Well, markets go up and markets go down, I suppose what this means is that perhaps some of the more pessimistic expectations might not be realised. Having said that, the European Central Bank has a very specific inflation focus mandate and its not going to change its tack very easily, and it is coming from a situation where interest rates are regarded by them as abnormally low in Europe, so I think we can look forward, first of all to more increases, just by one inflation number of 2.4, which is still above their target, by the way their target is 2 per cent. That's not going to stop them in their tracks,,I think, I think, ah provided the numbers allow for it and that's an important consideration you will see a couple of more rises. What it does say, however, I think, is that perhaps people looking for higher figures of another one per cent, ah, I think that will very much depend on how things go next year and the international economy is looking a bit more unsettled than it was, so I think there are question marks over the extent of rises, but I think another half per cent is certainly in the bag.[DM] So, if we are having half a per cent, when will we have it this year?[PMc] Emm, there's a good chance we'll get all of it this year, indeed, amm, baring some very significant change, I think the European Central Bank feels that they are as we say on the markets behind the curve, we are starting from a situation of abnormally low rates, 2 per cent for them and they want to get back to where they want to be closer to a neutral zone as fast as they can, and, the growth at the moment is quite strong, we've got a strong figure this week, I think, this year the growth figures in Europe will propably remain reasonably good, I think its next year the question marks are over. So I think next year the chances are we'll so more action between now and next year.[DM] Ok, Pat McArdle of Ulster Bank, thanks very much for joining us.
Mark Mahorney submits: I’ve been watching the housing markets. Home prices are still up 3% year-over-year. That’s not much of a slowdown. Home prices are still increasing at the rate of broader inflation. Inflation is a very tricky thing because it’s always true that when we have to pay more for one thing, we have less money left to buy other things, and that puts pressure on the prices of those other things, offsetting the increase in inflation in that first thing. When home prices rise, on average people will have less money to spend on other things. They can tap their homes equity by borrowing against it, but that’s just delaying the inevitable because they’ve got to pay back the loan eventually and they will then have less money to spend on other things by the amount of their new higher loan payments. So the consumption benefits are temporary. It’s only when you build something that other people want that wealth and value is created. Just purely bidding up prices without building anything is only inflationary. If the price of your home goes up for no other reason than because people are now willing to pay more for it than before, then the people who are paying more for it have less money to spend. But if the value increases because you improved your property and in doing so you purchased goods and services, then you added to other peoples’ wealth and that offsets the higher amount people are paying for property.Homes alone aren’t really a source of wealth creation. That’s a myth. They do nothing to increase the overall productivity of the economy. The only reason we, on average, can own bigger and bigger homes is from a very macroeconomic perspective, we are spending less time and energy on our basic needs and we are having them met much more cheaply than in the past. People are choosing to spend more on homes because they can. The same goes for healthcare. Economists and market bears like to worry about the rising cost of healthcare. The way they measure this is the average amount people are spending on healthcare and the total size of the industry. But they never consider that perhaps the portion of our healthcare expenses that is relatively discretionary is increasing. In other words, people are paying more for healthcare in part because they are choosing to do so, because they can afford to make that choice, because even at today’s high prices for gasoline and many other commodities, people still have relatively more money to spend on healthcare.The Myth of Housing as a Source of Wealth Creation Mark Mahoneyhttp://usmarket.seekingalpha.com/article/15716
Pa ElGrande wrote: Translation: I have no idea what the ECB are going to do, beyond what they have already indicated and 2007 is not looking good.
But if the value increases because you improved your property and in doing so you purchased goods and services, then you added to other peoples’ wealth and that offsets the higher amount people are paying for property
Beta2 wrote: This is so true and its a crying shame. We've had 10 years of a booming economy, at times the best performing economy in the world, and what do we have to show for it? Absolutely Nothing.
antoinolachtnai wrote: The thing is that in certain circumstances (such as inner cities) urban development *is* is a driver of the economy. Increasing the density does have positive economic effects. Of course there is a lot more to urban development than selling houses. But increased demand for and investment in the built environment does drive things along.
Over two days in the Polish capital, a total of 8,000 people visited the Sheraton Hotel in the hope of landing a lucrative contract with an Irish building firm. "It was extraordinary. Some had travelled distances of six or seven hours," said FAS corporate affairs director Greg Craig. Also represented were the Construction Industry Federation (CIF) and the Irish Congress of Trade Unions, which gave advice on employment rights, the minimum wage and union recognition."We're producing more houses than anyone else in the developed world. Construction is very important in the Irish economy," said Martin Whelan, head of public affairs with the CIF.They queue in their thousands to reach the promised (Ire)landhttp://www.unison.ie/irish_independent/stories.php3?ca=9&si=1673699&issue_id=14531 [free registration required]
antoinolachtnai wrote: Well, wealth is being created. The quality of the housing stock has generally improved in the last ten years. There is also more of it.
antoinolachtnai wrote: We have no major problem getting more people to keep the growth going. They are queuing up in Poland.
antoinolachtnai wrote: A problem we do encounter is finding reasonably priced accommodation for them all. But there is a lot of unoccupied property, according to correspondents to this thread, which means there is potentially a cushion available.
antoinolachtnai wrote: Unoccupied property doesn't earn anything, no matter how valuable it is. However, having high-priced land encourages owners to develop it, or sell it at a high price to someone who will develop it.
antoinolachtnai wrote: Rising energy costs will make centrally located land even more valuable.
antoinolachtnai wrote: A lot of Ireland's wealth comes from foreign direct investment.
antoinolachtnai wrote: (PS The house I mentioned before eventually went for 21 percent over the asking, on its sixth day on the market. It was priced to sell, but it was still 12 percent more than the owners expected.)
nereid wrote: Quite true, or another way of looking at could be: The eurozone is doing better than expected and hence forecasts can be altered to take the actual values into account rather than the values we expected to have into account.
The European economy grew at its fastest rate in six years during the second quarter of 2006, raising the pressure for yet more interest rate hikes. Growth hit 0.9pc in both the 12-nation euro currency zone and the 25-country EU in the April-June period, compared to January-March.BUSINESS WEEK : Rates pressure rises as euro economy surgeshttp://www.unison.ie/irish_independent/stories.php3?ca=35&si=1673723&issue_id=14531
nereid wrote: Don't get me wrong, I too believe that property is over valued, all I am saying is that if you take the viewpoint of the man in the interview, it is not overvalued as much as was thought, hence the bubble is not as big as some would say. Of course that is if it is a bubble.
To provide an answer to this one needs to establish, or define, exactly what a bubble is. We can define a bubble as activities that spring up on the back of loose monetary policy of the central bank. In other words, in the absence of monetary pumping these activities would not emerge. Since bubble activities are not self-funded, their emergence must come at the expense of various self-funded or productive activities. This means that less real funding is left for productive activities, which in turn undermines those activities. In short, monetary pumping gives rise to the misallocation of resources, which as a rule manifests itself through a relative increase in non-productive activities against productive activities.Housing Bubble: Myth or Reality? by Frank Shostak, March 04, 2003http://www.mises.org/story/1177
nereid wrote: In other words, if over the next couple of years (short term) the eurozone economy does strengthen, then house prices may match (to some extent) the value in the economy in a similar way to a part of your extract that you did not highlight: You seem to ignore the facts that nowadays planning is entering a much more rigourous and structured format. See Adamstown and the next planned zone east of that at Balgaddy. These zones are structured to provide services and communities. Though, I agree that there currently exists plenty of unstructured development.
nereid wrote: Anyway, at the very least it can be shown that there arguments that support both sides of the argument - agree with them or not they do exist and are valid. Until something actually does (or does not) change then it is speculation and hypothesising by both sides. L.
antoinolachtnai wrote: Re money being loaned - well the housing stock has to be capitalized somehow. This is how the money system works. The money supply is increased through lending to match the wealth being created.
antoinolachtnai wrote: Re the Polish queue. The falloff could be years away. When the Transport 21 projects come on-stream that will absorb labour once again, and may well kick off another cycle of construction, who knows? Anyway, the question you asked was where the people would come from to sustain the boom. There are plenty there. And besides them, there are over 50m people on the adjacent island even though it is not much bigger than our one. Immigration from there will happen too.
antoinolachtnai wrote: You say the price is based on sentiment, not lack of supply? Where is the supply then? It looks to me like there is a shortage of supply of quality, well-located homes. Otherwise it wouldn't be a buyer's market, no matter what the sentiment was like.
antoinolachtnai wrote: Re petrol prices, my definition of central would be 'not mainly dependent on private transport'. An increase in petrol bills could end up as a cost of a hundred euros a month for a family. That could provide a reason to spend extra tens of thousands or so on a centrally located home.
antoinolachtnai wrote: Re FDI and US money, if you are convinced that the Irish economy and talent pool is in such a bad state that all the money is just going to flee, then you are saying there is a problem with the economy as a whole, not just with the property sector. You could be onto something there, but it is a different argument. There is no evidence that this sector is collapsing. I am a little surprised by that myself, but the evidence just isn't there.
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