Housing Bubble Bursting

Supercell · 24-12-2008 7:22pm

gurramok wrote: »

And the old reliable, couples who are settling down with ba-ba's on the way would be lunatic to buy an Irish apt.

Why?

Irish apts are not designed for families, they are designed for singletons hence its best practice to price apts on a singletons wage.

Exactly, couples have a nasty habit of wanting to start families..which means for a time more often that not that there is only one earner in the family.
Apartments are stopgaps, they are not seen as permanent homes by us Irish, at least the married ones, with intentions of starting a family.

Apartments are going to enter Armageddon territory financially, there simply is no sustainable long term market for them here at current prices. The poles etc will stop coming in a recession, who else is going to rent these tiny shoeboxes?, no-one is the answer..at least until the price makes sense...Ie those on student budgets for low end shoeboxes and those on an average wage at reasonable size.
Apartments are going to continue to fall and hard for another couple of years in all likelihood as they are STILL wildly overpriced compared to their real actual market for what they were designed for (I say that loosely)..i.e. single people to live in or childless couples.

johnnyskeleton · 02-01-2009 9:12pm

In the spirit of everyone making predictions about 2009, what do people think about the housing bubble bursting this year.

I think that the mentality that property always increases is gone but people are still looking for high prices, and other people are trying to pay these prices (but failing due to sensible bank valuations).

Does anyone think that we will see:

1) house prices come down to realistic levels?
2) the bottom of the market?
3) an end to the property obsession in culture and media?
4) the end of the world as we know it?

or what do people predict for the housing market in 2009? Note there is a general predictions thread in the Economics forum, so perhaps this should be limited to property prices. Also, I'd hope to hear from property bulls as much as the bears.

02-01-2009 9:59pm

I think (hope) that the prices of well located bog standard houses will eventually settle at around 3.5 times the average earnings for a single skilled/experienced worker of an amount that is affordable without straining the mortgagee.

Houses in the far flung exburbs (a commute too far) will be worthless.
One off houses will still continue to be built for those who can afford them, but no new estates will be started for at least a couple of years.

johnnyskeleton · 02-01-2009 10:04pm

Deleted User wrote: »

I think (hope) that the prices of well located bog standard houses will eventually settle at around 3.5 times the average earnings for a single skilled/experienced worker of an amount that is affordable without straining the mortgagee.

Do you think that is possible for 2009. IMO, we won't see that level for a few years.

The_Conductor · 02-01-2009 10:08pm

Supercell wrote: »

Exactly, couples have a nasty habit of wanting to start families..which means for a time more often that not that there is only one earner in the family.
Apartments are stopgaps, they are not seen as permanent homes by us Irish, at least the married ones, with intentions of starting a family.

Apartments are going to enter Armageddon territory financially, there simply is no sustainable long term market for them here at current prices. The poles etc will stop coming in a recession, who else is going to rent these tiny shoeboxes?, no-one is the answer..at least until the price makes sense...Ie those on student budgets for low end shoeboxes and those on an average wage at reasonable size.
Apartments are going to continue to fall and hard for another couple of years in all likelihood as they are STILL wildly overpriced compared to their real actual market for what they were designed for (I say that loosely)..i.e. single people to live in or childless couples.

Maybe the unemployed builders out there could be gainfully employed knocking a few of these together into reasonable sized units, that people could actually live longterm in? A 2000 sq. foot apartment, even in todays market, would have a few interested parties.

The other thing of course which is going to ruin the market for apartments- is Management Companies. Why pay 2 grand a year and have limited say over what you can and cannot do?

BobbyD10 · 02-01-2009 11:46pm

smccarrick wrote: »

Maybe the unemployed builders out there could be gainfully employed knocking a few of these together into reasonable sized units, that people could actually live longterm in? A 2000 sq. foot apartment, even in todays market, would have a few interested parties.

The other thing of course which is going to ruin the market for apartments- is Management Companies. Why pay 2 grand a year and have limited say over what you can and cannot do?

Mine eyes may have deceived me today but I could have swore I seen an entire vacated block of apartments as I passed through Stepaside today.

Either the builder has gone bust or they do not have buyers for them.

Also, the point you make about mgt companies is a vaild one, and will not be a good seelling point when people go to sell them.

I am suprised apartments so far have not taken the steep decline I had expected. Maybe people are still looking for unrealistic prices.

BendiBus · 02-01-2009 11:47pm

smccarrick wrote: »

The other thing of course which is going to ruin the market for apartments- is Management Companies. Why pay 2 grand a year and have limited say over what you can and cannot do?

The same can be said of private housing developments with management companies, not just apartments.

On the other hand, having a say over what your neighbours can/can't do may be attractive to some people. It enforces a bit of civil behaviour. Most house rules are just common sense, and what you'd hope your neighbour would do anyway. And having a (good) managing agent to deal with problem neighbours can be worth the management fee all by itself!

Another point on maintenance fees is that a good chunk of it (most of it in most cases) is made of stuff you'd have to pay for anyway - building insurance, exterior maintenance etc.

Bad managing agents and poorly informed management companies are what will do the damage, not this particular arrangement for running private developments.

blast05 · 03-01-2009 12:25am

Do you think that is possible for 2009. IMO, we won't see that level for a few years.

We're already seeing it. 139K for a well built 4 bed semi in Tubbercurry, Co. Sligo - a nice town a 20 minute drive from Sligo. A 90% 20 year mortgage at AIB's current rate of 3.75% and factoring in the small bit of mortgage interest relief means a monthly repayment of ~€660 per month. I knows its all location location location bla bla but its not bad for a nice town within a handy commute of a major regional town.

The other thing of course which is going to ruin the market for apartments- is Management Companies. Why pay 2 grand a year and have limited say over what you can and cannot do?

I currently pay €315 per year (~15 miles from Dublin city centre) as a management fee on a housing state where the landscaping would have a good chance of winning manys a garden show. €2000 is crazy money.

Predictions for property market for 2009 ..... i wouldn't be that daft to make one !! Only thing is i just can't see property values being 3.5 times average income in the long term as some hope. Whether all the bears on this thread like or agree, i feel there is still a deep cultural attachment to property in this country like very few other that will ensure in the long term that Ireland will be a small bit different to international norms. Sure think of our politics, voting still painfully dictated by a civil war from 85 years ago !! Mindsets don't change easily here

Eglinton · 03-01-2009 12:50am

trellheim wrote: »

get the property bee add-on and do a daft search for all 2-bed apartments in D6

that will tell you the true story so far.

Ok I've given this plug-in a go and I have to say it's pretty good. Here's a sample. I just took the 2 beds in Dublin 6 for starters.

Milltown Grove: 30K drop from Sep to Oct (455 to 425) [-6%]
Milltown Mount St Annes: 100K drop in Sept alone (619 to 519) [-16%]
Rathmines Woodford: 35K drop from Aug to Sep (460 to 425) [-7.6%]
Terenure Bushy Park: 30K drop from Aug to Dec (455 - 425) [-6.7%]
Rathmines Town Centre: 25K drop from Jun to Nov (475 - 450) [-6.7%]
Terenuure Bushy Park: 45K drop from May to July (590 - 545) [-5.2%]
Rathmines Road: 30K drop from May to Dec (380 - 350) [-7.9%]
Cowper: 50K drop from May to Oct (510 - 460) [-9.8%]
Cowper Downs: 125K drop from Apr to Nov (560 - 435) [-22.2%]
Rathmines Town Centre: 50K drop from Apr to Aug (470 - 420) [-10.6%]
Rathmines Wynfield: 55K drop from Mar to Nov (350 - 295) [-15.7%]

I'd say other types of searches/locations would be very interesting to see, particularly in the commuter belt if someone wants to give it a go. I may get around to it if I can.

It's a pity this plug-in only works for daft.ie - There aren't as many properties on it as Myhome.ie

whizzbang · 03-01-2009 10:53am

I did comparison about a year ago and daft had about three times more properties than myhome. Myhome also specifically changed their site so that prices are displayed as images to prevent things like the property bee from working. AppArently they didn't want attention being draw to house price drops...

03-01-2009 11:14am

whizzbang wrote: »

I did comparison about a year ago and daft had about three times more properties than myhome. Myhome also specifically changed their site so that prices are displayed as images to prevent things like the property bee from working. AppArently they didn't want attention being draw to house price drops...

Well now that the cat is out of the bag and even the dogs on the street know, they look a bit silly now.

Wonder when they'll drop the charade!

johnnyskeleton · 03-01-2009 6:04pm

Deleted User wrote: »

Well now that the cat is out of the bag and even the dogs on the street know, they look a bit silly now.

Wonder when they'll drop the charade!

Even though everyone knows that prices are dropping, a lot of individual vendors would still prefer if their price drops were not picked up on. So I can't imagine myhome will change their policy.

gurramok · 03-01-2009 9:14pm

blast05 wrote: »

Predictions for property market for 2009 ..... i wouldn't be that daft to make one !! Only thing is i just can't see property values being 3.5 times average income in the long term as some hope. Whether all the bears on this thread like or agree, i feel there is still a deep cultural attachment to property in this country like very few other that will ensure in the long term that Ireland will be a small bit different to international norms. Sure think of our politics, voting still painfully dictated by a civil war from 85 years ago !! Mindsets don't change easily here

Emigration by Irish/non-Irish in 2009 along with unemployment hitting 13%(my own prediction, don't crucify me:D) and the elephant in the room , an economy contracting by 4%+ in 2009 based on whoever one believes will ensure that magical 3.5 times average income just might be realised.

I don't see the 3.5times thing happening as widespread in 2009 though but I wouldn't rule it out happening for 1beds in the likes of Mulhuddart/Tallaght, these things take time to filter through to more properties.

smooth operater · 03-01-2009 9:52pm

gurramok wrote: »

Emigration by Irish/non-Irish in 2009 along with unemployment hitting 13%(my own prediction, don't crucify me:D) and the elephant in the room , an economy contracting by 4%+ in 2009 based on whoever one believes will ensure that magical 3.5 times average income just might be realised.

I don't see the 3.5times thing happening as widespread in 2009 though but I wouldn't rule it out happening for 1beds in the likes of Mulhuddart/Tallaght, these things take time to filter through to more properties.

Funny you say that actually.

A work colleuge of mines brother just bought a 1 bed apt. from the affordable housing in Tallaght at 124k.....Thats just over 3.5 times an average? salary

Now im not one to ly and nor is he, so I can only presume he speaks the truth

Maybe now is the time to buy?
Edit; Or else theres more to follow

Blackjack · 03-01-2009 9:56pm

smooth operater wrote: »

Funny you say that actually.

A work colleuge of mines brother just bought a 1 bed apt. from the affordable housing in Tallaght at 124k.....Thats just over 3.5 times an average? salary

Now im not one to ly and nor is he, so I can only presume he speaks the truth

Maybe now is the time to buy?
Edit; Or else theres more to follow

Wouldn't house a family of 2 adults and 2 kids I'd expect.

Not everyone qualifies for affordable housing either.

gurramok · 03-01-2009 11:00pm

Thats cheating using affordable housing

Yes, i believe you that your brother's colleague did get that price as its heavily discounted by the council.

What i meant was open market prices, not state subsidy discounts!

Eglinton · 04-01-2009 1:17pm

I've now done a search of the M50 southern perimeter (Lucan to Killiney) for 3/4 bed semis. The ideal family home.
Here's a selection of the typical price drops.

Lucan, Fairways: 135K drop from Nov to Dec (585 - 450) [-23%]
Tallaght, Old Bawn: 90K drop from Nov to Dec (384 - 294) [-23.4%]
Tallaght, Sundale: 45K drop from Nov to Dec (295 - 249) [-15.3%]
Leopardstown, Glenbourne: 25K drop from to Dec (520 - 495). This one is interesting because it has dropped 5K every few few weeks and is constantly being updated for 'Viewing Next Saturday. [-4.8%]
Lucan, Elmbrook: 46K drop from Nov to Dec (345 - 299) [-18.8%]
Stepaside, Belarmine 70K drop from Sep to Dec (540 - 470) [-13%]
Stepaside, Patrick's Park: 90 K drop from Sep to Dec (439 - 349) [-20.5%]
Tallaght, Kingswood: 80K drop from Sep to Dec (379 - 299) [-21.1%]
Firhouse, Woodlawn: 35K drop from Oct to Jan (420 - 385) [-8.3%]
Leopardstown, The Gallops: 76K drop from Oct to Dec (675 - 599) [-11.3%]
Leopardstown, The Gallops: 225K drop from Sep to Dec (824 - 599) [-27.3%]
Killiney, Beechwood: 21K drop from Mar - Jun (620 - 599) This one is definitely due another price drop soon!

[-3.4%]
Killiney, Brookdean: 55K drop from Feb - Dec (550 - 495). [-10%]
Killiney, Bayview: 75K drop from Aug - Nov (530 - 455) [-14.2%]

As you can see, the range of percentage reductions varies dramatically. Almost all houses on sale prior to Oct have been reduced. Some are on the market for a long long time.

There doesn't seem to be any correlation between the price of a house and it's location. I've seen many identical houses in the same area for vastly different prices (over 100K differences Lucan alone). There are also sh1tholes in Tallaght that are being advertised at much the same price as some good places in Stepaside and Killiney. There are sh1tholes in Killiney being advertised at the same price as good places in Killieny and so on...

After seeing the variances for myself, I think the prices will drop significantly more in 2009 and 2010. Houses are not selling at all. Also, I think the price drops we hear about on the news of 0.8% per month in Dublin are way off the mark. It appears to be a lot more.

Gurgle · 04-01-2009 1:29pm

Given that this thread has been going for just over 2 years, during which time the average house price has fallen by less than 15%, is everyone at last ready to concede that it was in fact a soft landing ?

And of course, any further reductions are due to the global recession, not that houses were really that much over-priced for the times and circumstances (i.e. the boom) ?

Eglinton · 04-01-2009 1:38pm

Gurgle wrote: »

Given that this thread has been going for just over 2 years, during which time the average house price has fallen by less than 15%, is everyone at last ready to concede that it was in fact a soft landing ?

I don't think we know how much house prices have dropped as there's no accurate sales info. I don't think we've reached the point at which there's a crash in prices just yet as no one is willing to advertise at sane prices. Once people start buying again we'll see severe reductions on the 2006 highs.

Uuuh Patsy · 04-01-2009 1:41pm

Gurgle wrote: »

Given that this thread has been going for just over 2 years, during which time the average house price has fallen by less than 15%, is everyone at last ready to concede that it was in fact a soft landing ?

And of course, any further reductions are due to the global recession, not that houses were really that much over-priced for the times and circumstances (i.e. the boom) ?

Here, Here. I think David McWilliams Started all this fuss back in 1999. He knew he was right then, and I bet your all sick now.

Now can I start the End of the World Thread. It is nigh-ish.:D

spockety · 04-01-2009 1:47pm

Gurgle wrote: »

Given that this thread has been going for just over 2 years, during which time the average house price has fallen by less than 15%, is everyone at last ready to concede that it was in fact a soft landing ?

And of course, any further reductions are due to the global recession, not that houses were really that much over-priced for the times and circumstances (i.e. the boom) ?

A non functioning market hasn't landed, either softly or by crash, yet.

I think we've already gone past a soft landing (which I took to mean a levelling of house prices). If the market suddenly starts functioning now and houses shift in their droves at current asking prices, I would say it is a very hard landing or a non-fatal crash.

Nothing is indicating that things are about to pick up, if anything, it's about to get worse.

Unless you can offer any fundamental economic info that says otherwise?

Oh, and by the way, there was no 'boom'. Everything was property and cheap credit. We actually produced nothing, and we are now left with our cacks around our ankles showing our bare arses to the world.

spockety · 04-01-2009 1:52pm

blast05 wrote: »

Predictions for property marklet for 2009 ..... i wouldn't be that daft to make one !! Only thing is i just can't see property values being 3.5 times average income in the long term as some hope. Whether all the bears on this thread like or agree, i feel there is still a deep cultural attachment to property in this country like very few other that will ensure in the long term that Ireland will be a small bit different to international norms. Sure think of our politics, voting still painfully dictated by a civil war from 85 years ago !! Mindsets don't change easily here

Eh, we are not even talking about international norms here. We are talking about IRISH norms that existed up until 1997! The 'deep cultural attachment to property' doesn't seem to be helping to shift the tens of thousands of empty apartments and houses that litter the market.

And as for the guy who bought a 1 bed apt in tallaght for 124k.. I don't think that should qualify for the 3.5 times. Someone earning 35k a year should be able to buy ex council houses etc. Even in tallaght houses in the likes of Jobstown and Cushlawn are asking 280k+! Ludicrous.

daveirl · 04-01-2009 2:02pm

This post has been deleted.

spockety · 04-01-2009 2:06pm

daveirl wrote: »

This post has been deleted.

I don't think that is true. There are loads of buyers, but they are being wiser with their money. Every house in the country has a value that the market will pay for it. If a seller offers their house at the price, it will shift very quickly.

Nothing is shifting at the moment because sellers are not asking market value for their properties. Simple as!

04-01-2009 2:10pm

Eglinton wrote: »

I've now done a search of the M50 southern perimeter (Lucan to Killiney) for 3/4 bed semis. The ideal family home.
Here's a selection of the typical price drops.

Lucan, Fairways: 135K drop from Nov to Dec (585 - 450) [-23%]
Tallaght, Old Bawn: 90K drop from Nov to Dec (384 - 294) [-23.4%]
Tallaght, Sundale: 45K drop from Nov to Dec (295 - 249) [-15.3%]
Leopardstown, Glenbourne: 25K drop from to Dec (520 - 495). This one is interesting because it has dropped 5K every few few weeks and is constantly being updated for 'Viewing Next Saturday. [-4.8%]
Lucan, Elmbrook: 46K drop from Nov to Dec (345 - 299) [-18.8%]
Stepaside, Belarmine 70K drop from Sep to Dec (540 - 470) [-13%]
Stepaside, Patrick's Park: 90 K drop from Sep to Dec (439 - 349) [-20.5%]
Tallaght, Kingswood: 80K drop from Sep to Dec (379 - 299) [-21.1%]
Firhouse, Woodlawn: 35K drop from Oct to Jan (420 - 385) [-8.3%]
Leopardstown, The Gallops: 76K drop from Oct to Dec (675 - 599) [-11.3%]
Leopardstown, The Gallops: 225K drop from Sep to Dec (824 - 599) [-27.3%]
Killiney, Beechwood: 21K drop from Mar - Jun (620 - 599) This one is definitely due another price drop soon! [-3.4%]
Killiney, Brookdean: 55K drop from Feb - Dec (550 - 495). [-10%]
Killiney, Bayview: 75K drop from Aug - Nov (530 - 455) [-14.2%]

As you can see, the range of percentage reductions varies dramatically. Almost all houses on sale prior to Oct have been reduced. Some are on the market for a long long time.

There doesn't seem to be any correlation between the price of a house and it's location. I've seen many identical houses in the same area for vastly different prices (over 100K differences Lucan alone). There are also sh1tholes in Tallaght that are being advertised at much the same price as some good places in Stepaside and Killiney. There are sh1tholes in Killiney being advertised at the same price as good places in Killieny and so on...

After seeing the variances for myself, I think the prices will drop significantly more in 2009 and 2010. Houses are not selling at all. Also, I think the price drops we hear about on the news of 0.8% per month in Dublin are way off the mark. It appears to be a lot more.

I think the reason for the variations are the sellers differing expectations of the market. Some are more desperate to sell then others, hence the varying drops.

EnoughSaid · 04-01-2009 3:08pm

Eglinton wrote: »

I've now done a search of the M50 southern perimeter (Lucan to Killiney) for 3/4 bed semis. The ideal family home.
Here's a selection of the typical price drops.

Lucan, Fairways: 135K drop from Nov to Dec (585 - 450) [-23%]
Tallaght, Old Bawn: 90K drop from Nov to Dec (384 - 294) [-23.4%]
Tallaght, Sundale: 45K drop from Nov to Dec (295 - 249) [-15.3%]
Leopardstown, Glenbourne: 25K drop from to Dec (520 - 495). This one is interesting because it has dropped 5K every few few weeks and is constantly being updated for 'Viewing Next Saturday. [-4.8%]
Lucan, Elmbrook: 46K drop from Nov to Dec (345 - 299) [-18.8%]
Stepaside, Belarmine 70K drop from Sep to Dec (540 - 470) [-13%]
Stepaside, Patrick's Park: 90 K drop from Sep to Dec (439 - 349) [-20.5%]
Tallaght, Kingswood: 80K drop from Sep to Dec (379 - 299) [-21.1%]
Firhouse, Woodlawn: 35K drop from Oct to Jan (420 - 385) [-8.3%]
Leopardstown, The Gallops: 76K drop from Oct to Dec (675 - 599) [-11.3%]
Leopardstown, The Gallops: 225K drop from Sep to Dec (824 - 599) [-27.3%]
Killiney, Beechwood: 21K drop from Mar - Jun (620 - 599) This one is definitely due another price drop soon! [-3.4%]
Killiney, Brookdean: 55K drop from Feb - Dec (550 - 495). [-10%]
Killiney, Bayview: 75K drop from Aug - Nov (530 - 455) [-14.2%]

As you can see, the range of percentage reductions varies dramatically. Almost all houses on sale prior to Oct have been reduced. Some are on the market for a long long time.

There doesn't seem to be any correlation between the price of a house and it's location. I've seen many identical houses in the same area for vastly different prices (over 100K differences Lucan alone). There are also sh1tholes in Tallaght that are being advertised at much the same price as some good places in Stepaside and Killiney. There are sh1tholes in Killiney being advertised at the same price as good places in Killieny and so on...

After seeing the variances for myself, I think the prices will drop significantly more in 2009 and 2010. Houses are not selling at all. Also, I think the price drops we hear about on the news of 0.8% per month in Dublin are way off the mark. It appears to be a lot more.

Don't forget that these are just drops in the asking prices. The actual selling prices will be much lower!

Eglinton · 04-01-2009 4:12pm

EnoughSaid wrote: »

Don't forget that these are just drops in the asking prices. The actual selling prices will be much lower!

Absolutely - And they are there to be shot to pieces. I think it'd be a good idea to go in with an offer of 50% of the asking prices to make things interesting. Maybe even less :P

As spockety says, there are places in Tallaght looking for 280k and I agree that this is ridiculous.

Someone who wants to buy in the horrible estates in Tallaght will almost certainly not have a deposit saved to buy a house. Lets say the banks are looking for 10%, that means they'll have to have the guts of 30K. Not gonna happen. Now lets say that person saves 500 euro per month for the next 1.5 years (I doubt they could save much more), then they'll have nearly 10K. If this is all the average low income person can save in this time period, then all the bad houses will have to come down to around 100K.

Anyone earning more than this or if they are a couple with a combined salary will not want to buy in the bad estates. So either the bad houses come down hugely or never sell.

gurramok · 04-01-2009 4:36pm

Gurgle wrote: »

Given that this thread has been going for just over 2 years, during which time the average house price has fallen by less than 15%, is everyone at last ready to concede that it was in fact a soft landing ?

And of course, any further reductions are due to the global recession, not that houses were really that much over-priced for the times and circumstances (i.e. the boom) ?

This is year 2 of the crash transitioning to year 3. Watch out for more falls for the next 2 years at least. And yes they have been overpriced for about the last 10years.

Crashes can take anything from 4 years to 6/7 years without a Japan style correction.

You can quote me on this in 2 years time

EnoughSaid · 04-01-2009 5:57pm

Gurgle wrote: »

Given that this thread has been going for just over 2 years, during which time the average house price has fallen by less than 15%, is everyone at last ready to concede that it was in fact a soft landing ?

Not sure where you got the 15% from because the numbers available are only reductions in asking prices. The actual selling prices are probably down by about 35%.

Freddie59 · 04-01-2009 6:26pm

daveirl wrote: »

This post has been deleted.

That's about it. And I think one thing (aside from the world crisis) that makes this 'crash'/'correction' different to previous ones is the availability of information via fora like this on the Internet. Coupled with other websites like Property Watch and Property Pin, making buyers even more wary and much more shrewd than in the past.

Housing Bubble Bursting

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