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Housing bubble starting to pop?

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Comments

  • #1232
    [Deleted User]
    Posts: 5,082 ✭✭✭ [Deleted User]


    and RTE website deleted this poll from their website but google cache has it stored:
    http://216.239.59.104/search?q=cache:Okuf3ZGCF_oJ:www.rte.ie/comments/comments.html+site:www.rte.ie+poll+estate+agents&hl=en&gl=ie&ct=clnk&cd=1


  • #1233
    miju
    Banned (with Prison Access) Posts: 8,483 ✭✭✭miju


    D'Peoples Voice wrote:
    He says that prices on a year-on-year figures give a better indication of house prices than month-on-month.

    but when prices where rising every month everyone had no problem saying prices roses by x amount this month , now they're falling it's back to the yearly figures :rolleyes:

    oh and blindjustice RTE didn't delete the poll they archived it as they change the poll everyday on their website


  • #1234
    [Deleted User]
    Posts: 5,082 ✭✭✭ [Deleted User]


    miju wrote:
    oh and blindjustice RTE didn't delete the poll they archived it as they change the poll everyday on their website


    have a look for it - its nowhere to be found in the archives


  • #1235
    SimpleSam06
    Closed Accounts Posts: 4,048 ✭✭✭SimpleSam06


    Deleted User wrote:
    have a look for it - its nowhere to be found in the archives
    That was 94.63% in favour of much more real estate agents regulation, around a thousand votes cast, in case anyone is too lazy to look it up.


  • #1236
    SimpleSam06
    Closed Accounts Posts: 4,048 ✭✭✭SimpleSam06


    And actually, well well, heres another interesting poll, have Irish property prices peaked?

    55.16% (759 votes) - Yes
    37.14% (511 votes) - No
    7.7% (106 votes) - Maybe

    Some of the comments in there are great...

    "Timber....the party's over. You know its over when on a cost per sqm you can buy property cheaper in Paris, London and New York.
    Barry, Bray "

    "No they have not peaked....they may slow down but wont stop and certanly will not go back...demand for houses for next 3 years is very high...
    Smooth, Cork "

    "No, way, not by a long shot. Sure there's no limit to how high they can go.
    Andrew, Dublin 13 "

    "It has got so bad that us first time buyers are not getting a chance to get on that property ladder it not affordable! Crazy! More people will be still at home at 40!!
    Susan, Dublin "

    :D


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  • #1237
    whizzbang
    Registered Users, Registered Users 2 Posts: 1,366 ✭✭✭whizzbang


    SimpleSam06 wrote:
    "No, way, not by a long shot. Sure there's no limit to how high they can go.
    Andrew, Dublin 13 "

    :D

    oh come on! I'd love to meet this guy and find out his rational for this!

    This one is fun as well
    We've been saying over the last 4 or 5 years that prices will fall and they haven't. Why should potential buyers be convinced they've peaked this time?
    Niall, Galway

    well, there are these things called interest rates....


  • #1238
    ninebeanrows
    Registered Users, Registered Users 2 Posts: 12,780 ✭✭✭✭ninebeanrows


    Theres a house at the top of my road that hasnt sold and its been for sale for months now... Theres a sign in my on back yard..

    But other than that im absolutely clueless about this topic so farewell...


  • #1239
    eirmail
    Registered Users, Registered Users 2 Posts: 178 ✭✭eirmail


    Weathercheck wrote:
    Theres a house at the top of my road that hasnt sold and its been for sale for months now... Theres a sign in my on back yard..

    But other than that im absolutely clueless about this topic so farewell...


    I used to be clueless until i read the wikipedia articles on asset bubbles and propperty bubbles about 6 monyhs ago.


  • #1240
    hi5
    Registered Users, Registered Users 2 Posts: 3,107 ✭✭✭hi5


    SimpleSam06 wrote:
    "It has got so bad that us first time buyers are not getting a chance to get on that property ladder it not affordable! Crazy! More people will be still at home at 40!!
    Susan, Dublin "

    :D
    This is the cause of the problem imo,like the person above they dont really know what the "property ladder" is,they believe its something out there that nobody has control over,they just cant get their heads around the idea that if FTB's are priced out of the market (temporarily) then prices will come down to match their budget.
    If FTB's are still at home in their 40's then who will developers sell new builds to?
    Susan and her like could control the market if they stopped listening to the spin,instead they are being controlled and fleeced at the same time.


  • #1241
    Calina
    Registered Users, Registered Users 2 Posts: 8,219 ✭✭✭Calina


    People like Susan annoy me. I moved out of my parents' place when I was 17. There's such a thing as "rent" you know, where you pay for the use of a house.

    I suppose I should be grateful people are that blinkered that they feel forced to stay at home because rent is you know, bad, and short term and dead money. With them out of the market, my rent has remained reasonable.


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  • #1242
    Calina
    Registered Users, Registered Users 2 Posts: 8,219 ✭✭✭Calina


    SimpleSam06 wrote:
    "No they have not peaked....they may slow down but wont stop and certanly will not go back...demand for houses for next 3 years is very high...
    Smooth, Cork "

    And the logic for that is? If demand is very high, then logically, increases will not be slowing down.

    God I love this country. The level of wishful thinking is amazing.


  • #1243
    evilcart
    Closed Accounts Posts: 1 ✭evilcart


    I thought prices in Dublin were too high back in 1999. I thought they were too high in 2000, 2001, 2002, 2003, 2004, 2005, 2006.

    I am wrong every single year until I am right. And thus I have been completely 100% wrong every year, so far. Sure 2007 is most likely the first big year of the pull back. But at all levels I have missed this market.

    The Irish housing market will correct, but we will not be buying homes
    @ 3X times earnings anytime soon.

    For those who dream of snapping up a nice home, in two or three years for cents on the euro. Be aware that a real estate crash can bring bring a whole new set of problems. There may be job loss, interest rate increases, tougher lending rules, difficulty selling current home.

    Affordability and purchase price often go hand in hand. You could find yourself making the same monthly payment even though the homes sale price has dropped 100K. A 500k home at a low interest rate may cost you the same as a 400k at higher interest rate.

    I look forward to a more sane housing market, I just hope it is slow and easy. There is no point wishing the whole thing blows up only to find banks are unwilling to lend, or the market is so bad you become afraid to buy.

    Having said that, when the price is right, I will find it very hard not to pull the trigger.


  • #1244
    Sponge Bob
    Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    evilcart wrote:
    I thought prices in Dublin were too high back in 1999. I thought they were too high in 2000, 2001, 2002, 2003, 2004, 2005, 2006.

    I am wrong every single year until I am right. And thus I have been completely 100% wrong every year, so far. Sure 2007 is most likely the first big year of the pull back. But at all levels I have missed this market.

    Historical data shows that as prices rose in 1999 2000 and (maybe) 2001 then so did rents. That indicates that the price rises then were sustainable because the market essentially confirmed the house prices by upping the rents along with the price of the house.

    Rent has remained static or even dropped in many areas since 2002 . This implies or even proves that there is a surplus of property in those areas .

    Did anybody read this article on the effects of housing crashes when they happen in the Irish Times last week ?? OK it was written by an economist :p . I know.


  • #1245
    Reyman
    Registered Users, Registered Users 2 Posts: 1,297 ✭✭✭Reyman


    evilcart wrote:
    I thought prices in Dublin were too high back in 1999. I thought they were too high in 2000, 2001, 2002, 2003, 2004, 2005, 2006.

    I am wrong every single year until I am right. And thus I have been completely 100% wrong every year, so far. Sure 2007 is most likely the first big year of the pull back. But at all levels I have missed this market.

    The Irish housing market will correct, but we will not be buying homes
    @ 3X times earnings anytime soon.

    For those who dream of snapping up a nice home, in two or three years for cents on the euro. Be aware that a real estate crash can bring bring a whole new set of problems. There may be job loss, interest rate increases, tougher lending rules, difficulty selling current home.

    Affordability and purchase price often go hand in hand. You could find yourself making the same monthly payment even though the homes sale price has dropped 100K. A 500k home at a low interest rate may cost you the same as a 400k at higher interest rate.

    I look forward to a more sane housing market, I just hope it is slow and easy. There is no point wishing the whole thing blows up only to find banks are unwilling to lend, or the market is so bad you become afraid to buy.

    Having said that, when the price is right, I will find it very hard not to pull the trigger.


    Good post EC ! A lot of wisdom there for those interested.

    My recollection for the 1970s and 1980s was that the accepted correct value of the house you finally finished up in (i.e. after one or two trade ups) was four times your personal salary (i.e. a single salary)

    Anyone like to hazard a guess on what it is now?


  • #1246
    Sponge Bob
    Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    Your recollection is both correct and irrelevant Reyman :D

    a) most families buying then had a single income earner, now most have 2
    b) income tax as a % of the average wage was a lot higher back then .
    c) Interest rates were a lot higher back then too .
    d) however my sister got the £3000 first time buyer grant on a £29k house meaning the government gave her over 10% upfront .

    Average income now is c €35k while average prices are c €300k so its now nearly 9x average income .

    I personally think that with lower interest rates and lower income taxes we will have a future average house price of 6x income not 4x . They are still too high .


  • #1247
    Calina
    Registered Users, Registered Users 2 Posts: 8,219 ✭✭✭Calina


    Sponge Bob wrote:
    a) most families buying then had a single income earner, now most have 2

    this presumes that most of those families will not have an interruption to double incomes via children and a) taking time off to care for same or b) paying creche fees. Either way, the second income is not long term dependable or else, future demographic growth is in big trouble. It's not even medium term dependable as people are older when they move in together and there is a limited window on the having children front.


  • #1248
    Sponge Bob
    Banned (with Prison Access) Posts: 25,234 ✭✭✭✭Sponge Bob


    true but it takes 2 or 3 sprogs to cancel out a typicalish second income .


  • #1249
    Calina
    Registered Users, Registered Users 2 Posts: 8,219 ✭✭✭Calina


    and the average birthrate required for population replacement is in excess of 2 per family.


  • #1250
    D'Peoples Voice
    Registered Users, Registered Users 2 Posts: 1,698 ✭✭✭D'Peoples Voice


    House Prices grew by an annualised rate of 1.21% in November
    http://www.esri.ie/irish_economy/permanent_tsbesri_house_p/HPI2005Nov_report.pdf
    Prices for houses Outside Dublin fell, first time since December 2004.
    The average price for 3 bed semi-detached house showed no growth in November
    The average price paid for a house in Dublin and outside Dublin in November of this year was EUR368,576 and EUR240,201 respectively.

    After the entry of Slovenia into the euro area on jan 1st, Ireland's influence on Monetary policy (interest rates) has been further diluted.
    Before Slovenia joined, we contributed to 0.9% of the economy of the euro area, hence the ECB would take 0.9% of our growth/inflation rates into account when considering interest rate changes, compared to 35% of Germany's growth/inflation rates. The recent entry of Slovenia means that ireland's economy is slowly becomming almost totally irrelevant to the future direction of interest rates in the euro area.


  • #1251
    [Deleted User]
    Posts: 5,082 ✭✭✭ [Deleted User]


    p;


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  • #1252
    [Deleted User]
    Posts: 5,082 ✭✭✭ [Deleted User]


    Calina wrote:
    this presumes that most of those families will not have an interruption to double incomes via children and a) taking time off to care for same or b) paying creche fees. Either way, the second income is not long term dependable or else, future demographic growth is in big trouble. It's not even medium term dependable as people are older when they move in together and there is a limited window on the having children front.



    Do NOT underestimate the importance of this point.
    Even through illness/injury - we all get sick
    Children - Ideally we want (as a nation) to spend some time with them!
    This whole crack of buying out in ballygobackwards while workin in the big smoke and havin two sprogs is crazy!

    To say that if it levels off now and the norm needed to buy a house(in ballygobackwards) is for a joint income UNINTERRUPTED for 35 YEARS

    Its absurd.Do NOT underestimate the importance of this point.
    Even through illness/injury - we all get sick
    Children - Ideally we want (as a nation) to spend some time with them!
    This whole crack of buying out in ballygobackwards while workin in the big smoke and havin two sprogs is crazy!

    To say that if it levels off now and the norm needed to buy a house(in ballygobackwards) is for a joint income UNINTERRUPTED for 35 YEARS

    Its absurd. A nation of pensioners paying mortgages.


  • #1253
    Do-more
    Registered Users, Registered Users 2 Posts: 4,748 ✭✭✭Do-more


    As said above the "crash" will be a long drawn out affair not a short sharp shock, I've seen estimates of anywhere from 3 to 14 years before we see any growth from where the market bottoms in real terms.

    But to give an example of what can happen, a friend's mother who lives in Liverpool bought two semi-d's at a bank repo auction after the UK crash in the early 90's (? date) before the crash houses on that street were selling for £26-£28K sterling, she bought the two of them for £8K (by that I mean £4K each!) they had been fully refurbised by an investor and were in walk in condition.

    Having said that I know gerry built shoe boxes in West Dublin which are probably valued at €280,000 now and if someone was bidding €40K for one in 3 years time, I wouldn't be bidding against them! ;)

    invest4deepvalue.com



  • #1254
    SimpleSam06
    Closed Accounts Posts: 4,048 ✭✭✭SimpleSam06


    D'Peoples Voice wrote:
    House Prices grew by an annualised rate of 1.21% in November.

    Hmmm. Taken on a month by month basis however, house prices are in fact dropping outside of Dublin, according to this finfacts article. Here are a few more interesting quotes from the article:
    Looking specifically at November the price of houses nationally rose by 0.1% during the month, down from the rate of 0.6% recorded in October this year and the 0.7%, 1.0%, 1.1%, 1.2% & 1.6% recorded in September, August, July, June & May respectively. The index also reveals that over the last twelve months (i.e.: from November 2005 to November 2006 inclusive) the growth in national prices was 13.1%. This is down significantly from the rate of growth to October ‘06 (14.2%).

    House prices in Dublin grew by 0.8%, while prices Outside Dublin fell by 0.1%. In October 2006 the relative price increases were 0.9% and 0.2%.

    The average price for 3 bed semi-detached house showed no growth in November, down slightly from the rate in October 2006 (0.1%) while in November last year growth of 0.8% was registered.
    Is this the first official note of house prices dropping in Ireland? If we extrapolate that trend a bit further, back of the envelope calculations here, the rate of price increases has dropped by about 1.5% from May to November, discarding that the rate of droppage is increasing, which gives us about 0.2% per month.

    Given a baseline of 0.1% increases, at this rate the price of housing will have dropped by 2.4% by this time next year. If the trend in November is the pattern, housing will have dropped by about 6% by November 2007. So given this, it should take about ten years for property to reach what I would call its "true value", around 50% to 60% of what it is now.

    External influences will affect this one way or the other, inflation, interest rate rises or decreases, public sentiment, build rates and so on. Of course this is fairly speculative, but there it is, for what its worth. The curve is most definetely turning, however.
    Deleted User wrote:
    To say that if it levels off now and the norm needed to buy a house(in ballygobackwards) is for a joint income UNINTERRUPTED for 35 YEARS
    Its worth noting that after fifteen or twenty years, the bulk sum owed on a mortgage is reduced by a fair amount, especially factoring in inflation (although thats nowhere near as high as it was in days of yore). This might be offset by rate rises, that remains to be seen. You're dead on correct though, most couples can just forget having kids for at least ten years, assuming there are no other problems. Although childminding services might only be needed for about three years per child, they cost enough that you may as well discount them.

    It really is a form of indentured servitude, especially with falling house prices. You won't be able to move or change jobs. Welcome the new boss, same as the old one.


  • #1255
    SimpleSam06
    Closed Accounts Posts: 4,048 ✭✭✭SimpleSam06


    And I see someone has updated the wikipedia "Irish property bubble" entry. Here are a few choice snippets...
    An IMF report in 2000 said the Irish property bubble, if sustained, would go against all evidence collated in other countries that had experienced such a phenomenon. House prices have tripled since that report was published.
    Since 2000, approximately 75,000 housing units have been built every year as detailed by the Department of Environment, Heritage and Local Government. However, a significant proportion of these new homes are unoccupied. Economic commentators give a figure of approximately 230,000 vacant properties. Of these up to 115,000 or so may be holiday homes.

    Figures exist for completions because the ESB provides information on the number of properties newly connected to the electricity network and from data supplied by Local Authorities and from The Dept of the Environment and the CSO.
    Currently there is enough zoned land to accommodate 460,000 new homes, though as housing density figures continue to rise each year existing land has the potential to provide an even greater number of housing units.
    23% of Irish GNP is dependant on construction. Of this new residential housing construction makes up nearly 13% of GNP.
    The Irish Financial Regulator has suggested in its latest Financial Stability Report (2006) that Irish residential property prices are, at present, anywhere between 14% and 75% overvalued, depending on the valuation model used.


  • #1256
    D'Peoples Voice
    Registered Users, Registered Users 2 Posts: 1,698 ✭✭✭D'Peoples Voice


    http://www.businessworld.ie/livenews.htm?a=1616762;s=rollingnews.htm
    Mortgage affordability to improve

    Estate agent Lisney has produced research claiming that rising pay and slower house price growth this year will improve mortgage affordability.

    Lisney says net incomes will rise by 9.25pc this year. Using Bank of Ireland's forecast of 3pc house price growth, it says that mortgage repayments should fall as a percentage of net income as a result.

    Strange but I can't find in this story anything about FUTURE interest rates being expected to increase in March, June and September this year.

    http://www.bloomberg.com/apps/news?pid=20601068&sid=a065HvU.hVW8&refer=economy
    Money-supply growth in the euro region unexpectedly accelerated in December to the fastest pace in almost 17 years, increasing pressure on the European Central Bank to raise interest rates.
    .....the highest growth rate since February 1990, according to ECB records.
    ...ECB governing council member Mario Draghi said Jan. 23 there are no signs of economic growth slowing in the 13-nation euro region.
    ....Futures trading shows investors have increased bets the ECB will raise its key rate to 3.75 percent in March.


  • #1257
    D'Peoples Voice
    Registered Users, Registered Users 2 Posts: 1,698 ✭✭✭D'Peoples Voice


    Do-more wrote:
    As said above the "crash" will be a long drawn out affair not a short sharp shock, I've seen estimates of anywhere from 3 to 14 years before we see any growth from where the market bottoms in real terms.
    At least the year is getting off to a good start!
    http://irishhousepricesfalling.blogspot.com/2007/01/new-year-new-price-drops.html

    I can't imagine what two more interest rate hikes and futher uncertainty about job security will do to the market!


  • #1258
    xbox-face
    Closed Accounts Posts: 24 ✭xbox-face


    i try to buyu house, they tell me if i have no job i cannot take mortgage. can i sue these racists


  • #1259
    stevedublin
    Registered Users, Registered Users 2 Posts: 980 ✭✭✭stevedublin


    xbox-face wrote:
    i try to buyu house, they tell me if i have no job i cannot take mortgage. can i sue these racists

    you probably can sue them, but you'll lose.
    :D


  • #1260
    HashSlinging
    Closed Accounts Posts: 3,412 ✭✭✭HashSlinging


    .from accommodation and property

    Seen someone post a message about the US market and a forcast by HSBC US Mortgage Services.

    HSBC Mortgage Services in the US have said there forcast of 8.8 billion dollors for bad debt due to defaults will be higher by some 20%. Mainly in relation to mortages taken out in 05 - 06.

    Now put the kettle on.


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  • #1261
    jreddington
    Closed Accounts Posts: 5 ✭jreddington


    I was curious about this thread's participants' opinion on the Section 23 tax relief and its present and future impacts on property prices.

    As background, I am an Irish citizen but have lived in the U.S. all my life. My long term plan is retirement to Ireland. Have been scouting out areas and monitoring property prices. I now am financially set enough to consider purchasing a second home in Ireland but not at today's prices. Of course looking back, I should have stretched and purchased something 5-6 years ago.

    Plan is to purchase and let as a holiday home, using it myself when I can. In my present position I can gradually transition to retirement spending more and more time in Irleland with full retirement, living full time in the property, in 10-15 years.

    During the last few visits I have been amazed by the number of Section 23 projects. I have learned that as a U.S. taxpayer, the benefits of this are not available to me and that such a property would be a poor choice since the selling prices are inflated over comparable non-23 properties.

    However, I've had some interesting discussions aobut this. Theory is that this tax break has been available for about 5-6 years. You have to hold the property for 10 years to maintain the tax benefit. Therefore, I see a possibility of a lot of these units coming on the resale market in 4-5 years. Such an inventory would have downward pressure on all properties.

    Looks like the market may have turned downward already but looking out in the 5+ year timeframe does Section 23 look like an important factor?


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