Housing Bubble Bursting

seamus · 12-06-2009 01:19PM

beeno67 wrote: »

No 4- We have approval in principal which is much the same thing. Bank can hardly give full mortgage approval unless they know property they are saked to approve mortgage on.

Why not? The couple can either afford the mortgage or they can't. The property is irrelevant.

What you can have is standard set of figures which a bank provides when someone approaches them for a mortgage. The person(s) provides the information, and the bank hands them back a document which shows the maximum amount that they can borrow, the recommended amount which they should borrow (15-20% of disposable income over 25, for example) and the minimum amount the bank can lend as a mortgage, and include the relevant rates and tables. This document is legally binding - i.e. the bank is required to make that loan available for six months. You can then include stipulations that the contract is void if the couple's circumstances change, and is subject to the usual valuation by the bank and the 92% rule, etc etc.

The hardest part that I found about house hunting was not knowing exactly what you could get from the bank and that for a large part of the time, you were asking, "I want to buy this house, will you let me", instead of "I want a house, how much can I afford?". Approval in principle is good to a point, but in the current climate I imagine many people are worried that even with approval in principle, the bank might withdraw it after the couple have already signed contracts.

beeno67 · 12-06-2009 02:27PM

seamus wrote: »

Why not? The couple can either afford the mortgage or they can't. The property is irrelevant.

Well in fairness it is the property that is mortgaged not the couple so the property is very relevant. The property is the collateral on which the money is raised. The bank has to be reasonably sure it is worth what the buyer says it is. They cannot do this until they know what the property is.

bobbiw · 12-06-2009 03:18PM

beeno67 wrote: »

Well in fairness it is the property that is mortgaged not the couple so the property is very relevant. The property is the collateral on which the money is raised. The bank has to be reasonably sure it is worth what the buyer says it is. They cannot do this until they know what the property is.

In the us you can get prequalified for a cetain loan based on income, down payment and savings etc etc.

The home still has to be valued before the funds are exchanged. So they are not going to give you 2m for a home worth 1. But they would give you 2m once they determine its worth that.

jmayo · 15-06-2009 10:11AM

I think this is as good as anywhere to post this link since enough posters on here would have been sceptical and incredulous at some of the posts of BOC in the Sunday Indo (rag cough cough) concerning porperty investment.

Anyway just to cheer all you other sceptics up, poor ould Brendan it seems followed his own advice and now is more than a little upset that he is in negative equity.
I know people may say I am revelling in others misfortune, but hey it couldn't happen to a nicer guy

Life's a bitch and maybe there is a thing called karma after all

Anyway here is link to said rant...

http://www.independent.ie/opinion/analysis/hurley-and-his-banker-cronies-have-ruined-this-country-fire-him-now-1773209.html

Duckjob · 15-06-2009 10:25AM

jmayo wrote: »

I think this is as good as anywhere to post this link since enough posters on here would have been sceptical and incredulous at some of the posts of BOC in the Sunday Indo (rag cough cough) concerning porperty investment.

Anyway just to cheer all you other sceptics up, poor ould Brendan it seems followed his own advice and now is more than a little upset that he is in negative equity.
I know people may say I am revelling in others misfortune, but hey it couldn't happen to a nicer guy
Life's a bitch and maybe there is a thing called karma after all

Anyway here is link to said rant...

http://www.independent.ie/opinion/analysis/hurley-and-his-banker-cronies-have-ruined-this-country-fire-him-now-1773209.html

Nelson wrote:

Haaaww - hawww

What happened to being a smart and ballsy guy Brendan?

Didn't hear you trying to persuade people to be careful 2 yrs ago - too busy exploiting your position as a journo talking up your own interests as a new buyer.

Bit rich to start lecturing about human consequences now.

oceanclub · 15-06-2009 10:30AM

Duckjob wrote: »

Bit rich to start lecturing about human consequences now.

I'm always cognisant of not being gleeful when someone's misfortune is concerned, but any "no glee" policy should be rescinded for this fecker.

P.

Duckjob · 15-06-2009 10:37AM

oceanclub wrote: »

I'm always cognisant of not being gleeful when someone's misfortune is concerned, but any "no glee" policy should be rescinded for this fecker.

P.

Me too, but like many people I have friends who are up to their necks in neg equity because they allowed themselves to be influenced by idiots in the media, talking up their own interests like BOC.

gurramok · 15-06-2009 11:32AM

What a smart ballsy guy. Whoever didnt listen to ths comedian was a fool in 2006

DTrotter · 16-06-2009 03:00PM

He's a star.

asdasd · 16-06-2009 03:09PM

His attitude is a joke. When Hurley warned about the irrational behaviour of the Irish market, he was poo-pooed by the Indo, and its rent-quote cabal of bank economists.

SLUSK · 17-06-2009 01:26AM

Deflation is a good thing for us who didn't do any mistakes, who aren't in debt and so on. People who were living the high life on borrowed money got what they deserved. I have no sympathy whatsoever for these people.

Fr0g · 17-06-2009 02:22PM

It's worth reading again

By Brendan O'Connor
Sunday July 29 2007

http://www.independent.ie/opinion/analysis/the-smart-ballsy-guys-are-buying-up-property-right-now-1047118.html

His then criticism of the central bank amounted to this:

"The Central Bank's version of gloom last week was to say that growth will fall this year - to 5 per cent. As falling growth goes, 5 per cent ain't bad."

Bad Central Bank being all doomy and gloomy!

whizzbang · 17-06-2009 02:55PM

Fr0g wrote: »

It's worth reading again

By Brendan O'Connor
Sunday July 29 2007

http://www.independent.ie/opinion/analysis/the-smart-ballsy-guys-are-buying-up-property-right-now-1047118.html

His then criticism of the central bank amounted to this:

"The Central Bank's version of gloom last week was to say that growth will fall this year - to 5 per cent. As falling growth goes, 5 per cent ain't bad."

Bad Central Bank being all doomy and gloomy!

ahhh good times.. good times...

CiaranC · 17-06-2009 02:58PM

Delighted for him, hope he becomes homeless

bobbiw · 17-06-2009 03:13PM

You guys are being very mean, although this begruding attitude is why most Irish never make anything of themselves at least in Ireland.

The guy believed in the property boom, like a lot of people and bought a house like a lot of people and now is in NE like a lot of people and doesnt like it, like a lot of people.

To wallow in someone elses misfortune is moraly bankrupt. That attitude is why Ireland is in the mess it is in today. Its why is will most probobly not recover from this recession for 10 years.

I do believe house prices will drop by considerably more, but for all you people happy about others peoples misfortune consider this.

You will not be buying a property, youre job will be long gone before prices drop to their final resting place.

This recession, market collapse is not going to help the average joe, it will only help the rich, its always been that way.

asdasd · 17-06-2009 03:28PM

To wallow in someone elses misfortune is moraly bankrupt. That attitude is why Ireland is in the mess it is in today. Its why is will most probobly not recover from this recession for 10 years.

Christ on a stick. Surely Ireland is not where it is today because of pessimists during the property boom, but quite the reverse.

17-06-2009 03:45PM

SLUSK wrote: »

Deflation is a good thing for us who didn't do any mistakes, who aren't in debt and so on. People who were living the high life on borrowed money got what they deserved. I have no sympathy whatsoever for these people.

True, but it will be difficult for those of us on lower incomes as the income is dropping quicker than the prices for goods and services.
For those of us with small mortgages the savings caused by interest rates falling is outweighed by the drop in income and the rise in taxes etc.

asdasd · 17-06-2009 03:54PM

youre little 60k a year job will be long gone before prices drop to their final resting place.

Nope.

bobbiw · 17-06-2009 04:00PM

asdasd wrote: »

Nope.

Actually I am correct, for prices to fall much further Ireland has to continue in a recession.

If GDP turns positive, banks stabalize and economic investment increases then any property collapse will most likely slow down.

It is unlikely though and there is massive oversupply and of course very few people moving to Ireland so we will see.

One thing is fairly clear, the majority again I said majority of people who did not buy over the last 10 years are ones who were too poor to.

These people will not benefit because people at the bottom of the social status tend to be hurt the worst by any recession in the long run because they have little distinguishable skills.

asdasd · 17-06-2009 04:08PM

These people will not benefit because people at the bottom of the social status tend to be hurt the worst by any recession in the long run because they have little distinguishable skills.

Yeah, but you were talking about 60K a year jobs. Mines safe. I am in fact moving on,and donfident that I will get a job ( after some time off). I dont feel any recession in my industry.

bobbiw · 17-06-2009 04:09PM

asdasd wrote: »

Yeah, but you were talking about 60K a year jobs. Mines safe. I am in fact moving on,and donfident that I will get a job ( after some time off). I dont feel any recession in my industry.

Again I am talking about the majority. But dont worry as long as you are ok who cares about anyone else.

asdasd · 17-06-2009 04:12PM

Hmm, but you said

youre little 60k a year job will be long gone before prices drop to their final resting place.

Your claim that those of us who held out are fecked anyway. I disagree.

gurramok · 17-06-2009 04:52PM

bobbiw wrote: »

You guys are being very mean, although this begruding attitude is why most Irish never make anything of themselves at least in Ireland.

The guy believed in the property boom, like a lot of people and bought a house like a lot of people and now is in NE like a lot of people and doesnt like it, like a lot of people.

To wallow in someone elses misfortune is moraly bankrupt.

Key word = misfortune.

It was not misfortune for BOC, he bloody cheerleaded the boom and the rising prices for zero sympathy for the victims, zero sympathy at all in return.

amacca · 17-06-2009 08:39PM

bobbiw wrote: »

You guys are being very mean, although this begruding attitude is why most Irish never make anything of themselves at least in Ireland.

The guy believed in the property boom, like a lot of people and bought a house like a lot of people and now is in NE like a lot of people and doesnt like it, like a lot of people.

To wallow in someone elses misfortune is moraly bankrupt. That attitude is why Ireland is in the mess it is in today. Its why is will most probobly not recover from this recession for 10 years.

I do believe house prices will drop by considerably more, but for all you people happy about others peoples misfortune consider this.

You will not be buying a property, youre job will be long gone before prices drop to their final resting place.

This recession, market collapse is not going to help the average joe, it will only help the rich, its always been that way.

Ah come on,There are some people nearly everyone likes to hate. BOC is imo a very easily dislikeable person. He did cheerlead the boom as indeed the indo did for perfectly understandable reasons (advertising revenue).

A lot of the articles, at least the ones I have had the displeasure of reading penned by BOC seem to contain nothing but vitriol directed at whatever group or individual BOC thinks his avid public might join in with him in hating that week.

It seems only fair that a man that hopes the world is as ugly a place as he probably is inside gets that ugliness reflected back at him some time.

I mean the least he could do is be entertaining when hes spewing all that vitriol around, some thought provoking analogies perhaps, some entertaining similes, an amusing anecdote or two. Alls Im saying is the man could make an effort ffs, theres only so much angst (especially when hypocritical) and bashing I can take without some sort of payoff.

Dammit this country needs a better class of journalist. We should insist on it.

DTrotter · 17-06-2009 09:22PM

I used to see him a few times on Abbey Street or talbot Street langered drunk in the evening a good few years ago. He's a prick and deserves what he gets, you think he gives a f*** aboout others negative equity, like hell? As for the time him and Brunker appeared on the late late show as if they were the face of new ireland, shudder.

ntlbell · 18-06-2009 09:13AM

bobbiw wrote: »

You guys are being very mean, although this begruding attitude is why most Irish never make anything of themselves at least in Ireland.

The guy believed in the property boom, like a lot of people and bought a house like a lot of people and now is in NE like a lot of people and doesnt like it, like a lot of people.

To wallow in someone elses misfortune is moraly bankrupt. That attitude is why Ireland is in the mess it is in today. Its why is will most probobly not recover from this recession for 10 years.

I do believe house prices will drop by considerably more, but for all you people happy about others peoples misfortune consider this.

You will not be buying a property, youre job will be long gone before prices drop to their final resting place.

This recession, market collapse is not going to help the average joe, it will only help the rich, its always been that way.

could you give us some sort of idea what sort of unemployment figures your predicting?

of those job's what % will be low skilled construction dependent jobs?

shouting that the majority of people in well paid highly skilled jobs are all going to lose them is a tad bizarre.

some figures please.

Calina · 18-06-2009 10:18AM

bobbiw wrote: »

One thing is fairly clear, the majority again I said majority of people who did not buy over the last 10 years are ones who were too poor to.

Amongst the people too poor to buy over the last 10 years are people who entered the work force on comparatively low starting salaries whose sole fault was to be born about 15 years too late. And amongst the people too poor to buy over the last 10 years were people earning up to 60KE a year. Or it might be better to say they were too poor to buy accommodation that suited their needs.

There are a lot of people who were wealthy enough to buy over the past 10 years and many of whom are not wealthy enough to keep paying for what they bought.

Your post does not seem to take reality into account. The truth is the disconnect between average property prices and average incomes became and still is unsustainable. Unless it corrects, the economy is not going to start growing. We have an excess supply of unsuitable accommodation - most estate agents will tell you apartments are almost unsaleable at the moment. They were only useful if property values were rising.

The truth is I could have afford to buy property in the past ten years, but at least 100km from where I worked. That's not sustainable for me from a health point of view or for the economy.

I could go on but frankly I don't see the point. Property values need to be in some way connected to people's long term ability to pay them. Over the past 5 years, the only way people could afford property was by forcing two incomes together at historically low interest rates, very high LTVs and historically long terms. IN many cases, they were paying back interest only - they couldn't even afford to reduce their capital.

This is not sustainable. It is totally insane that people who were earning 70% more than the median income couldn't afford property in a country that has so much supply.

That's not economically healthy and it is why the recession is comparatively bad here. It was total folly.

johnnyskeleton · 20-06-2009 07:28PM

bobbiw wrote: »

One thing is fairly clear, the majority again I said majority of people who did not buy over the last 10 years are ones who were too poor to.

These people will not benefit because people at the bottom of the social status tend to be hurt the worst by any recession in the long run because they have little distinguishable skills.

Is it possible that the reason why they were too "poor" to buy property over the last 10 years is because instead of taking the easy money of becoming a brickie, estate agent etc they spent the time actually learning a skill, putting themselves through college and working in menial jobs to gain experience?

I think that there was a large section of people who had no skills or were semi-skilled who were laughing at professionals and highly skilled people because while the latter were working on their skills, the former were buying houses and making a killing on buy-to-let. There has been an almost complete role reversal whereby a lot of the people who worked in construction related areas who once earned hundreds of thousands a year and owned several houses, are now unemployed and in negative equity. The ones who had nothing but worked on their skills are more likely to still be in work, but if not they will fare better if they emigrate.

I'm not saying this with any element of schadenfreude, but merely to point out that your assumption that people who couldn't borrow enough to buy property over the last 10 years are (counter-intuitively perhaps) quite likely to be doing better now and have greater skills.

Grawns · 21-06-2009 10:13AM

I am currently looking at house prices in Dublin and subtracting 50% based on waiting another 2 years to buy. I think that is very realistic but I am extremely fortunate that the only property I own is a house by the sea in West Clare, ( bought with my parents to get me on the property ladder and used all year round!). I paid £70'000 for it in 1998. Even than I went viewing in Dublin and thought I'm not paying those prices for that ****hole. I have been following property prices with interest for the last 10 years and never considered buying at the prices around.

This government have a hell of a lot to answer for ( greed is good eh!) and as for the gullible who voted for them time and again. For Fecks Sake! Hopefully they will be out of power soon and stay there until house prices recover to 2005/2006 levels - sometime in 2030

bangersandmash · 21-06-2009 11:31AM

A week ago we had this...

http://www.independent.ie/lifestyle/property-plus/why-its-my-time-to-buy-1771015.html

Today in the SIndo another piece of shameless PR...

http://www.independent.ie/national-news/lisa-and-gareth-waited-before-buying-1782439.html

Lisa and Gareth said they got fed up waiting and chose to buy last month. They bought a house in Rathfarnham, south Dublin, that last year was priced in excess of €600,000. They bought for €385,000.

"We could have sat on the fence forever worrying about whether the price would fall further after we bought. We are going to live in this house for at least the next 10 to 15 years. So, I'm not going to worry over €20,000 that may or may not have come off the price"

Housing Bubble Bursting

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