AARRRGH wrote: » In fairness now, a bank is hardly going to say we're no where near the bottom. It is in their interest to get the market moving again, so I would dismiss that article altogether.
smccarrick wrote: » God, you are optimistic. While I would be thrilled if you're right- I genuinely do believe you are not. You are extrapolating massively in an international context and presuming its valid to apply it to an Irish context. The fact of the matter is that Ireland, while not unique, is in a far worse position than almost any other country.
Euroland wrote: » Last year was the highest baby boom in Ireland, and the young parents, awaiting the last 3 years for the property prices stabilisation, are now eager to buy something to have a place for growing their kids. Thousands of people had to postpone their property purchases for the last 3 years, and now when the bottom is near, it is the right time for them to buy, before the investors flock back into the residential property market, or it would be too late.
Euroland wrote: » You are probably unaware of the recent problems in Eastern Europe and Africa, but even there numbers are now on a positive trend and people are upbeat on their economies and property markets. The World is now already on the uptrend.
Euroland wrote: » So, would you dismiss the American official statistics?
JupiterKid wrote: » 1) The Irish economy is in very serious trouble, much more serious than most of our Eurozone or global neighbours prescicely because of our obscene property and construction bubble that may well go into both history and economics text books as a warning and lesson to future generations of students. 2) Unemployment is still rising - right back to 1980s levels and the housing market was none too healthy during that decade, was it? (it was essentially stagnant for most of the 1980s). People cannot obtain a loan when they do not have a job and those losing their jobs are going into mortgage arrears and worse. 3) Emigration is back. Although most emigrating last year were from the recently joined EU 12 countries (and most of these were male, illustrating the collapse of the construction sector), more and more Irish are emigrating or considering emigration as their only option to find work. A falling population means a shrinking pool of potential house buyers. 4) The sheer overhang of vacant housing built - some of which will never be occupied and may have to be demolished - means that housing supply greatly outstrips demand and will for many years to come. 5) I reckon an ECB interest rate increase in 2010 is a real possibility as the rest of the Eurozone economy recovers and this will damage our fatally wounded housing market even further - leading to further price drops but also, more worryingly, a surge in mortgage arrears as it could be the "straw that breaks the camel's back" for many homeowners in negative equity and struggling to cope with mortgage repayments after a job loss/pay cut. 6) Ireland is so out of kilter with the rest of the Eurozone in terms of the economic cycle that it is frightening. We had interest rate cuts in the early 2000s which fuelled the fire of the property bubble and now face increases when the market is still in a state of collapse. These pro-cyclical interest rate trends are worsening the intensity of the economic cycles. 7) This story is far from over.
spockety wrote: » Where are all these homeless families putting their head down at night at the moment...?
AARRRGH wrote: » Who compiles the statistics?
Euroland wrote: » The World is now already on the uptrend.
Euroland wrote: » 1) The Irish economy now is doing well, the only problem is our public finances, which have no direct connection with residential property market.
Euroland wrote: » Budget deficit and level of public debt have nothing in common with the residential property market. Yes, they should be cured, but they have no direct connection with the property market.
oflahero wrote: » 1) There's a simple reply to all this tosh that you've been peddling - where's all this buyer money going to come from that gets the Irish property market onto an upward trend? 2) -We have the highest level of personal debt per capita in Europe; 3) -We are borrowing massively every day to plug the massive public finance gap; 4) -There is massive oversupply in the domestic housing markets (granted, a lot of it is apartments in 'commuter' locations); 5) -The ratio of asking prices to average salaries are still well over the long-term average, and salaries are going nowhere but down for both public and private sectors; 6) -Tough budgets are on their way; 7) -Interest rates are at historic lows and yet lending is relatively nonexistent, because; 8)-The Irish banks are technically insolvent. 9) There will be a while to wait while Ireland watches a global upswing before we follow suit. And that does not include this current 'dead cat bounce' equities rally thanks to current sliding dollar fears. 10) The only thing that can pave the way to your optimistic worldview is debt erosion thanks to hyperinflation - not a target I see on the ECB's charter.
smccarrick wrote: » No- they do have an effect on the probable direction of taxation however- which in turn has an effect on people's net income- and while it may be causal in nature- people's net income is going on a rampant downward trajectory......
Euroland wrote: » 1) From people's savings, lending and investors (local and foreign) 2) We also have one of the highest salary/income levels in EU and the world 3) Irrelevant, explaned in my previous post 4) The overhang situation was explained in my previous post 5) These ratios (both locally and globally) aren't fixed and have a long-term growth trend due to the increased demand for residential properties (fast growing population, increased standards of living, etc) from one side and limited supply fom the other side (lack of zoned land in cities and towns, building restrictions, etc), so, please, don't stick to the ratios of the 50s or 70s 6) Irrelevant, explaned in my previous post 7) Just wait a litlle bit and you would see the uptrend on the number of given new morgages 8) I agree, but with the help of NAMA (or other similar actions: i.e. bank privatisation after previous bancruptcy) the situation soon would be improved 9) Ireland is already on the upswing, following the others 10) There is no need for hyperinflation, current injections would be enough to improve the situation
Euroland wrote: » 1) From people's savings, lending and investors (local and foreign)
Euroland wrote: » 2) We also have one of the highest salary/income levels in EU and the world
Euroland wrote: » 3) Irrelevant, explaned in my previous post
Euroland wrote: » 4) The overhang situation was explained in my previous post
Euroland wrote: » 5) These ratios (both locally and globally) aren't fixed and have a long-term growth trend due to the increased demand for residential properties (fast growing population, increased standards of living, etc) from one side and limited supply fom the other side (lack of zoned land in cities and towns, building restrictions, etc), so, please, don't stick to the ratios of the 50s or 70s
Euroland wrote: » 6) Irrelevant, explaned in my previous post
Euroland wrote: » 7) Just wait a litlle bit and you would see the uptrend on the number of given new morgages
Euroland wrote: » 8) I agree, but with the help of NAMA (or other similar actions: i.e. bank privatisation after previous bancruptcy) the situation soon would be improved
Euroland wrote: » 9) Ireland is already on the upswing, following the others
Euroland wrote: » 10) There is no need for hyperinflation, current injections would be enough to improve the situation
Euroland wrote: » Yes, however a few percentage point increase in taxation would not divert majority of people from buying so much awaited own home. Such increase in taxation more likely would just slightly decrease their spending habits, i.e. going less to pubs/restaurants or buying less expensive food/clothing, less alcohol, etc
Snickers Man wrote: » Euroland, you're a shill. You need to read Calina's excellent post, or if that is too much you need to find three small pieces of data and do a simple sum. 1) What is the total housing stock in the country? 2) What is the average occupancy per dwelling? 3) What is the total population? I suspect you are in a business which will have that information readily to hand but if not, play this clip from a recent Late Late show. Skip to 19 minutes in. Answers a)1.94 million b) 2.8 persons c) 4.4million ie we have enough housing for an extra million people. You want prices to go up? Get breeding!!!!
Euroland wrote: » Are you so naive to believe that residential properties are bought for the acommodation purposes only? Residential property in almost every contry in the world, apart from its accomodation/dwelling function, is also seen as a valuable investment. Moreover, do you believe that in all coutries in the world people don't have a second or third home (i.e. a large familyhouse in the Dublin commuter belt + an apartment in the Dublin City Centre area + a holiday apartment (here or abroad))?
Euroland wrote: » Noncense. Analysing the national statistics trends you would immediately notice that Irish GDP will resume its growth at the end of 2009, while GNP growth will resume in Q1 2010.
Euroland wrote: » I am just saying that the Irish residential property market has had enourmous fall over the last 3 years (between 30 and 60%), and now, on the global uptrends in the economy and property markets, It won't escape the uptrend and would follow it too.
Euroland wrote: » 1) The Irish economy now is doing well, the only problem is our public finances, which have no direct connection with residential property market. Public finances can be improved by adjusting the public costs, starting from 0-40% salary reduction in the public sector on the case by case method, and reducing costs in other areas (redicing long-term unemployment benefits, etc)
Euroland wrote: » 2) The unemployment growth now near its end, balancing at 12.6%
Euroland wrote: » 3) Look back to the Irish experience of the early 90s or to the experience from other countries, where small emigration didn't make any serious impact on the property prices (only mass emigration, when at least 10-20% of population emigrates, can make significant impact on the property prices). Moreover, as soon as the companies start to create new jobs many of those emigrants would return back to Ireland.
Euroland wrote: » 4) With the overhang you have to look area by area, as most of the overhang was built in the areas where initially no one would buy. While in the sought after areas with restricted construction opportunities the prices soon would stabilise and go up. This is what I was saying right from the start: Irish residential market soon will follow the global route of property market segmentation. It is normal in other countries when the property market devided into 10-100+ different segments, each of them analysed individually.
Euroland wrote: » 5) The ECB rates would go up only when they (the ECB) would see clear signs of recovery in all economies and property markets.
Euroland wrote: » 6) I agree with you, however it could be tackled through full privatisation of lending/depositing/and operational facilities of all Irish banks, so the actual morgage rates and availability of credit facilities would be fully in the hands of the State, which then would manipulate them in the interests of the State and the Irish people, rather than in the interests of a small bunch of greedy bank owners.
Euroland wrote: » 7) The story is far from over, however now it is on the uptrend. I'm positive.:)
Snickers Man wrote: » I suspect you are in a business which will have that information readily to hand but if not, play this clip from a recent Late Late show. Skip to 19 minutes in. Answers a)1.94 million b) 2.8 persons c) 4.4million ie we have enough housing for an extra million people. You want prices to go up? Get breeding!!!!
smccarrick wrote: » 1) The public at large do not have savings- on the contrary- we have one of the highest level of private indebtedness in Europe. 2) Investors have gotten burnt- and don't see value in Ireland 3) Also- while we may have high headline salary/income levels- our purchasing power is only marginally above the EU average on a parity scale (source Economist again) 4) How is the fact that we're borrowing 410 million a week irrelevant? Public expenditure is going to be cut- and taxes are going to rise. People are going to have a lot less money to spend on everything- including housing. 5) You may have given 'an explanation'- however its only valid if you have an incredibly rose tinted view of where the economy is going. 6) Ireland's population is not growing. Our birth rate may have increased- but at a slower rate than net outward migration in 2008 (source CSO). 7) If you imagine we are going to have increased standards of living for a considerable period of time- I think you're dreaming. Things are going to get a lot worse for all of us before they get better. 8) Also regarding a lack of zoned land- its simply not true- in some parts of the country there are sufficient landbanks zoned to last over 100 years...... 9) How are tough budgets irrelevant- people are going to have less money- and the tax incentives that drove a lot of development over the past 15 years- are most certainly a thing of the past. 10) Compared to what? Boom years- or current depressed figures? Its easy to show an increase from a depressed base- but its far better to compare it to a historic set of data, rather than an appalling quarter. Even the most pessimistic people expect there to be some sort of a 'dead-cat-bounce' possibly even a series of them- this doesn't infer a recovery though- simply the establishment of a series of support levels at which relative affordability is reached at different periods of time. 11) As people's incomes fall- so too will their ability to pay any given asking price- and so ad infinitum. 12) Ireland is not on an upswing. The rate of our decline is slowing- there is a difference between an upswing and things not disimproving at the same rate. Our Central bank is currently forecasting a GDP contraction of 4.8% in 2010 (ontop of the circa 16% in 2009). They've not been the best with their forecasts in the past- given, but even with the best of will in the world we're looking at stabilising sometime in 2011- with a GPD possibly 35-40% down on peak figures, and when growth does return- its likely to be in the very low single digits, the 'tiger growth' is very much a thing of the past. 13) Current injections are helping the situation- to the extent that low levels of growth are already being recorded in France and Germany. This however means that the tap is going to be turned off- and then the excess liquidity brought back in by higher interest rates. Stated ECB policy is a normalisation of interest rates over a 3-4 year period (where normalisation is said to be overnight rates of 4.25-5% rates). Wonder what rates like this, along with a normal margin (which is not being charged by Irish institutions for political reasons at present) will do to the Irish consumer and their demand for housing?
Euroland wrote: » 1) Please don't mix these 2 things up and better look at the national statistics on the savings figure. And our high indebtedness levels just reflect our leading salary/income levels in the EU
Euroland wrote: » 2) There was no value in Irish residential property market just 3 years ago, but now it is, as the residential property prices went down by 30-60%, making Irish residential property market again attractive to the local and foreign investors.
Euroland wrote: » 4) As explained before, marginal tax increase doesn't affect people's decisions to buy residential property, it can only affect their spending habits.
Euroland wrote: » 7) For those who at work, the standards of living are already improving as the average prices went down and interest payments too, well above of the average salary/income reductions
Euroland wrote: » 8) I'm talking about lack of zoned land within the cities/towns (areas popular for living), but not elsewhere on the countryside
Euroland wrote: » 9) You're contradicting yourself: less new construction/development simply means less accomodation supply, which in turn would drive the property prices up
Euroland wrote: » 11) While residential property prices went down by 30-60%, the average income/salary levels went down only by a few %. So now, most of the people better of for buying residential accomodation than they were just 3-4 years ago.
Calina wrote: » 1) Then please take the following into consideration. 1) rental yield 2) transactional costs 3) available rental market For the most of the boom, rental yields in Ireland were close to negative. They were below the rate of general inflation and could only be justified on significant and ludicrous asset appreciation. As noted all over the shop now, that asset appreciation was based on sand. The rental market is contracting. The numbers of tenants available is plummeting. Rents are dropping as well as property prices. Yields are still around 3% or so. This is not a long term viable investment. 2) There is no point in everyone owning several properties; otherwise they have no one to rent to. This is why we had a property bubble - no one understood this. IN 2006, 40% of mortgages on new properties went to investors. There are investors taking haircuts on property investment all over this country because they paid attention to someone who pedalled the simplistic trash mentioned above to them.
